Pricing has an enormous impact when it comes to making a loss or a profit. In today’s business world, prices are frequently changed by algorithms that try to make best use of the available data. In general terms, Dynamic Pricing refers to estimating & using the price-demand relationship in order to maximize the overall revenue. But there is much more behind to make it right.
It all boils down to a good estimation of the customer’s (best case individual) WTP, or as we like to think about it as a probability = the “price acceptance” probability.
This requires a good understanding of the underlying customer’s choice process.
Since 2019 we are also organizing & hosting the Dynamic Pricing Competition – Bringing together Academia and Industry to compete in algorithms