In today’s competitive and fast-changing business landscape, an optimal pricing strategy needs to be equally dynamic. In such a scenario, using ‘pricing’ as a strategic lever to improve profitability proved to be challenging for a European energy management and building automation systems manufacturer.
The client needed a comprehensive solution to automatically generate a category-specific price at scale to meet the evolving demands and skilfully tackle the growing complexities of the operating environment. The manufacturer was also looking at leveraging price optimization and automating price quoting to better match market conditions and customer expectations. Besides, due to the standard manual processes that they followed for price setting, they were able to analyze only a few price points per product category due to which the quote turnaround time was high. Compounding the client’s challenges were frequent swings in raw material costs including copper, iron, and nickel. As such, keeping up with the commodity cost volatility and recovering losses through pricing turned out to be an arduous task.
Get in touch with our analytics experts to learn how Quantzig’s price optimization solutions can help you improve your pricing decisions and drive profitability.
Realizing the issue, the manufacturer set out to address this problem by leveraging advanced price optimization techniques. It was clear that they needed a solution that was responsive to all the complex factors involved in calculating their prices and could identify the areas of opportunity to increase margin. Also, they needed a scalable solution that could help them generate market-aligned, customer, and deal-specific prices without compromising on accuracy.
To help the client tackle their challenges, we adopted a comprehensive five-step, price optimization-based approach that leveraged machine learning techniques and predictive algorithms to generate thousands of price segments and produce market-aligned, differentiated prices for each unique product category.
Quantzig’s pricing analytics experts have designed integrated, predictive analytics methods to help tailor the best-fitting pricing and promotion strategy for your business. Request a free proposal to learn more about our price optimization capabilities.
Step 1: Data Pre-Processing
The initial phase of this price optimization engagement focused on improving data quality and data accessibility. Our experts conducted a comprehensive data audit to analyze data sets and system infrastructure to bridge gaps and identify the required transformations.
Step 2: Price Gap Analysis
The second phase of this price optimization study focused on monitoring and analyzing price gaps in real-time. This helped them gauge the effectiveness of the existing pricing strategies and devise new strategies based on the demand for different product categories.
Step 3: Pricing Model Analysis
The price optimization solution enabled the client to review and interact with price models that predict the P&L impacts of various pricing strategies, allowing them to choose the strategy that best aligns with their business goals for revenue and profit maximization.
Step 4: Pricing Model Development
An exhaustive list of factors potentially affecting the quoted prices was created, allowing our team to develop a framework to explore and validate the source data and synthesize an improved predictive pricing model.
Quantzig’s suite of pricing analytics solutions is comprehensive. Gain complimentary access to our analytics platform to learn more about the importance of price optimization in the manufacturing sector. Request a free demo today.
Step 5: Simulation and Implementation
A tree-based machine learning model was developed, and results were compared to the algorithms and data used to build and implement a robust pricing model.
Quantzig’s price optimization solutions helped the client devise a robust framework to optimize the brand’s pricing strategy by analyzing customer reactions to different price points and price changes. The systematic approach helped unravel new opportunities for improving profits and avoiding price leakages. This resulted in a significant improvement in revenue and profit margins and a measurable reduction in quote turnaround time and authorized price quoting.
Price Optimization Engagement Outcome
Improved Sales and Profitability
Quantzig’s strategic price optimization solutions enabled the client to enhance understanding of the impact of price changes, enabling them to make well-informed, forward-looking pricing decisions.
In this success story, the price optimization solutions offered tremendously improved the client’s ability to use price as a strategic lever to meet business goals and empowered them to capitalize on the complexity within their business. Learn more about the benefits of price optimization by requesting for more information now.
Identified New Growth Opportunities
The price optimizations solutions offered empowered the client to identify and capitalize on new areas of opportunity to increase profits.
Improved Quote Turnaround Time
The streamlined approach and advanced analytics solutions helped bring about drastic reductions in the turn-around time.