The Power of Data-Driven Pricing Optimization

Data-driven Pricing & Discounting

Prices are sensitive to market changes. That’s why staying competitive requires understanding the optimal price points for your products and services.

Understanding price sensitivity is essential for a successful pricing optimization and discount strategy. Data analysis and statistical methods use data, surveys, historical sales, retention and churn, demand forecasting and competitive benchmarking to reveal key drivers essential for optimizing your pricing strategy.

The right data analysis helps you develop your strategy by answering:

1. What are the right starting prices for your products or services? Begin by determining the baseline demand for your product and setting your starting prices to reflect the value of your offerings. Then, evaluate your customer’s willingness to pay and use value-based pricing strategies to adjust your pricing and offering structure to maximize your revenue and profits.
2. What discounts drive sales? Discounts attract new customers and drive up conversion rates, target specific customer segments (e.g., those with long-term contracts), increase retention and enhance customer lifetime value.
3. What current discounts are not driving ROI? Discounts may result in a low ROI value because they are offered to unprofitable customers, reduce the perceived value of your product or service or lack alignment with your pricing strategy. Rationalizing discount spend will help you improve your terms and programs.

Alexander Group can help you set the right baseline price for your products and evaluate your discounts with a stop/start/continue model to drive ROI. Through data and analytics, we can help you with your price optimization and discounting strategy to meet your sales goals, enhance profitability, and increase customer conversion and retention.