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AWESOME DYNAMIC PRICING

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Overview Of Dynamic Pricing

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Is a practice of setting a price for a product or service based on current market conditions. Dynamic pricing can be used in various price setting methods.

  • Cost-based pricing “adjusts prices dynamically according to business costs and keeps profit margins on a certain level.”
  • Competitor-based pricing takes into account competitor pricing decisions.
  • Demand-based pricing speaks for itself: Prices increase with growing consumer demand and dwindling supply, and vice versa.

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WHY?

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  • This pricing strategy has proven exceptionally effective in a wide range of industries: from e-commerce (e.g., TB International) to sports (e.g., Ticketmaster) and from food delivery (e.g., GO-JEK) to automotive (e.g., Carro) as it allows to adjust prices to changes in demand patterns.

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  • It is hardly surprising that recent times of extraordinary uncertainty and volatility caused a surge in the adoption of dynamic pricing strategies with an estimated 21% of e-commerce businesses reportedly already using dynamic pricing and an additional 15% planning to adopt the strategy in the upcoming year.

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Source : https://www.statista.com/statistics/1174557/dynamic-pricing-ecommerce-companies-worldwide/

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DATA LOADING (cleaning preprocessing)

BG/NBD MODEL (find initial beta and gamma for prior distribution)

THOMPSON RESAMPLING (work by employing beta and gamma from BG/NBD model) up to N trials

HOW IT WORKS

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