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Shirosoft_Pricing

Business challenge

Setting a product price is one of the most important steps companies can take to ensure a solid profit. However, determining the right price for a product is not a simple task. Which price will generate the most revenue? A lower price that drives more buyers? Or a higher price that may attract fewer buyers, but deliver more income per product? Also, cross-product pricing must be taken into account to ensure that products are not priced in isolation but their relationship as complements or substitutes are taken into account.

Solution

Shirosoft price testing and optimization software is a magento module that let companies easily setup price tests to generate demand and elasticity curves, and identify the price point that brings the highest profit margin. Simple choosing the sku of the products, the range of prices and the duration is enough to setup a test. Once the data have been collected, the software can be use to calculate the price that maximize the profit based on the demand curve and costs.

Features

  • Easily create price tests selecting the skus, range of price for each product and the duration of the test.
  • Each new user that access a product description is assigned a random price from the range of prices. Once a user visualize a price, the pricing module will present the same price to this user for the duration of the test.
  • The pricing module generates a demand model based on the number of orders associated with the products under test using a linear regression model.
  • Create linear elasticity and cross-elasticity curves from the demand model.
  • Generate revenue and profit model based on the demand curve and variable and fixed costs.
  • Security. The pricing module is accessed only though Magento’s administration page.

 

 

 

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