There are multiple components that factor into pricing decisions – competitors’ prices, product costs, the price that consumers are willing to spend. Monitoring the complexity of pricing variables can become overwhelming for decision-makers at enterprise companies that have hundreds if not thousands of products in their inventories.
Business leaders can use big data, predictive analytics, and data discovery to make more fully informed pricing decisions. Decision-makers can use data discovery tools to identify pricing variables that may otherwise be overlooked.
These can include shifts in consumer behaviors and preferences, and subtle changes in economic conditions. For line of business leaders at B2B companies, data discovery tools can help unearth insights regarding decision escalation points that are common among certain groups of buyers as well as the impacts of negotiations and incentives.
To better understand and incorporate the costs of goods, predictive analytics and data discovery tools can help decision-makers identify the company’s indirect expenses that should be factored into the pricing of products and services.
These can include corporate insurance, real estate costs, advertising, and labor. Business leaders can then use analytics to help weigh the impact of indirect costs on product pricing with other variables such as competitive pricing and customers’ willingness to pay certain prices.
The use of big data, predictive analytics, and data discovery can also help business leaders do a deep dive on the 80-20 rule (in this case, 20 percent of a company’s customers generate 80 percent of its profits). In many industries such as retail banking, the majority of customers are unprofitable.
However, big data blended with predictive analytics and data discovery can help business leaders identify the break-even and profitable prices that different customers segments would be willing to spend for certain products.
This can include product bundling, i.e., a consumer packaged goods company offering dishwashing detergent at an 8 percent discount with other kitchen cleansers or a bank bundling products such as checking and credit cards that offer points/rewards based on customer lifecycle status and perceived product needs and interest.