AI-based dynamic pricing is becoming a science. Companies are using data to determine demand and competition, and then they influence prices in real time. When you experience a spike in the cost of an Uber after a concert, for example, that's artificial intelligence-based dynamic pricing at work, or "surge pricing," as Uber calls it. This technology can also use data to determine what a customer is likely willing to pay for a product. With this insight, artificial intelligence can compare a retailer's pricing to its competitors to see where they land in comparison.
Basically, this means determining the most your customer would be willing to pay for your product or service. Value-based pricing is less effective in very heavily saturated market, where you are more likely to be undercut by another business. Ideally, you should be able to offer higher quality, more convenience, or more streamlined experience in order to succeed with value-based pricing. An example of value-based pricing would be if you were a website designer who typically charges by the hour. As you become more skilled and can offer a high-quality product in a few hours, you may be designing a client's entire website in half a day at a bargain rate.
The company rolling out Australia's National Broadband Network (NBN) has said it is about to begin another consultation period with retail service providers (RSPs) on its connectivity virtual circuit (CVC) wholesale pricing, with an "evolved model" expected to be implemented at the start of 2017. "We've recently implemented an industry-based discount model, ensuring the CVC price falls the more bandwidth retailers allocate to each of their customers," NBN told ZDNet in a statement. "The CVC price fell by AU 1.75 in June this year and we expect it to continue to fall as demand for bandwidth grows; that's the way the model is designed. We continue to review our pricing structure to ensure it supports uptake and usage, and meets our obligation of providing broadband at affordable prices. "NBN is working to evolve the CVC pricing model to an RSP-specific discount structure.
Price of misery: How can we account for the damage climate change (and other dangers) might do to our children, grandchildren, and far-flung descendants? As a part of our new Future of the Future series, Will Oremus looks at the academic debate over the maybe-not-quite-useful theory of social discounting.
IBM Dynamic Pricing enables merchandisers to create and optimize pricing strategies in real time to out-price the competition. This cloud-based offering automatically recommends an online retailer's optimal response. It combines web data, such as page views and cart abandonment--along with sales, inventory and the latest competitive pricing information--and uses pricing intelligence to recommend the optimal pricing action to achieve your business goals.