Frequently asked questions

Pricimetrics Max is software which utilizes a company’s transaction history and other data to identify the profit maximizing price for every item. It is designed to approach problems in the same way as an experienced human pricer. It looks for patterns in the data to identify and quantify the relationship between price, sales, and profit. Being software, Pricimetrics is infinitely faster than any person. But like any good human pricer, Pricimetrics can provide an easy to understand, intuitive explanation for why and how it makes its pricing recommendations.

Pricimetrics Max is designed to use any data available, should it find that data to be useful. At a minimum, it needs price, sales volume, and cost information for each item it analyzes. However, if additional information, such as competitor prices, or marketing campaign, is available, Pricimetrics Max can incorporate that data into its analysis, and if it determines that the additional data can help make its guidance more accurate, it will do so.

While we have utmost respect for products made by our competitors, Pricimetrics Max is designed very, very differently. Artificial Intelligence and Machine Learning tools are notorious for having a “Black Box” problem, where the mechanism is so opaque its results are often not understood even by the creators. This makes it very hard to tell when a system is going off the rails. Pricimetrics Max, on the other hand, has been designed from the ground up to take a conscious and cautious approach to AI and ML. It has been trained to solve pricing problems the same way as a human pricing expert would, albeit one which is lightning fast and isn’t bogged down by boredom, having to attend meetings, or other human frailties. It explains the results in a transparent manner.

No. Pricimetrics will operate just fine with data updated through a portal or email. 

Simply stated, the goal of pricing is to capture value.  When used as a strategic lever, pricing plays a key role in helping companies reach their objectives.  In the long term this means maximizing long term profits. In the short term, it may sometimes mean achievement of tactical goals such as gaining market share or rapid unloading of inventory.

Price Optimization is a process of finding the price that maximizes a company’s objectives. Simply put, it is the ideal price that best achieves a company’s current goals within relevant constraints. Whether it be profit maximization, gaining market share or something else.

Dynamic pricing means changing prices regularly to conform with changes in market conditions.  The term is often used to describe highly variable pricing, which changes multiple times a day or may even approach real-time pricing.

Market conditions change all the time; a price that was right last week could result in lost sales this week. To the extent feasible, prices should be revisited on a regular basis, and as frequently as market conditions change. For many businesses, that’s once a week or so. For other products or services, that might be several times a day, to monthly, quarterly or annually. It is generally dependent on the industry and distribution platforms and channels.

All too often, companies put too much emphasis on competition’s prices for their own pricing decisions.  Pricing your own products and services based on competitors means one’s pricing is as good or bad as the competition. So if the competition is mispricing, so are you. Moreover the price that fits well with a competitor’s strategy might be a total mismatch for your own.

There is another risk to competition-based pricing.  It tends to engender more of the same, engaging companies in an endless cycle of price matching or price cutting, to the detriment of the company and industry interests.

Value Based Pricing typically refers to the practice of pricing a product or service to correlate with its perceived value to customers.  Factors that affect perceived value include its features, marketing and advertising, and the price of alternatives. Even the weather, day of the week, and fads can affect perceptions of value. Although useful in a variety of situations, it is more appropriate for products and services whose perceived value is easy to approximate and doesn’t change frequently.

Unless price covers the costs of producing, a company loses money with each additional sale.  In certain cases, such as the sale of low priced products (“loss-leaders”), losing money this way may be appropriate, if the loss leader boosts the sale of higher margin products.  As a general rule sales price must be higher than cost price.

However, it is also possible to put too much emphasis on costs.  In fact, around 30-40% of companies set prices as a fixed markup on costs.  This practice, known as “cost-plus” pricing, is required in certain situations ( due to regulatory requirements). Otherwise in most cases, cost based pricing is a naive approach that leaves money on the table. 



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