Dynamic Pricing – maximising performance with Predictive Analytics

If an online retailer manages to raise his prices by just one percent, then he’s onto a winner. If there are no costs involved, his profit will rise by up to ten percent. Dynamic pricing can maximise performance, but to achieve that, the predictive analytics software must be able to do more than just compare competitive prices.

What’s the competition doing? Who’s reduced prices? Is a competitor running out of stock, and how could I benefit from that? The preoccupation with ‘the others’ regarding dynamic pricing almost borders on paranoia. And yet companies are foregoing the immense potential arising from deep analysis of their internal data.

Boosting profitability with ‚peanuts’

Our engine alters the perspective: Our focus is on analysing customer data rather than the competition, defining the price with the highest conversion probability for each product in the online shop. In doing this, we orientate ourselves to the highest feasible price. Success in raising the price of an SD card from 7.49 to 7.59 Euros is peanuts in each individual case. But since this product passes over the counter in massive quantities, a tiny price increase produces an enormous gain in margin, because neither the purchase price nor process costs have changed.

The more extensive the range, the greater the ‚long tail’. Don’t be afraid of really big data if you want to get prices moving. To predict optimum prices, retailers need sufficient transaction data including for C-classified goods. For the database, this means that several billion datasets must be processed in real time and in varying constellations. On fulfilment of these preconditions, our algorithm will make an extremely precise prediction of the price/sales function with only a few data points.

Dynamic Pricing at Predictive Analytics World with Conrad Electronic

At Predictive Analytics World 2016 on 8th and 9th November, I and Dr. Jörg Dubiel will be showing how intelligent Dynamic Pricing works in practice. Dr. Dubiel is Corporate Intelligence & Controlling Manager at Conrad Electronic SE, whose online shop sets standards with six million visits per month and more than 700,000 products for business customers. We succeeded in creating a success story around the topic of Dynamic Pricing in this massive experimental field for Dynamic Pricing.


Why not reserve your ticket now for Predictive Analytics World 2016 – available with the Early Bird tariff until 23rd September 2016.