Mastering the Art of Pricing Optimization — A Data Science Solution
<h1>1. Overview</h1>
<p>Pricing plays a very crucial role in the world of business. Making a balance between sales and margins is very important for the success of any business. How can we do it in the data science way? In this section, we will build the intuition of an effective data science solution for pricing optimization and then we will go into the details and code of each component.</p>
<p>Note — There are different types of pricing strategies but in this article, we will focus on building the pricing strategy for conventional businesses/established brands with enough data on price change history. Let’s look at the basic approach that we are trying to follow before going into details —</p>
<p><img alt="" src="https://miro.medium.com/v2/resize:fit:700/1*W4tuuWqMrxQ1FLTYDDNPDw.png" style="height:340px; width:700px" /></p>
<p>Image by Author</p>
<p>We have plotted sales and prices for item 1. In the past 9 months, there have been 2 price changes and clearly, we can see the impact on the sales. When prices were lower sales were higher. Now the question is how to <strong>quantify the impact on sales due to price changes in the past and predict the optimal price for the item in the future.</strong></p>
<p><a href="https://towardsdatascience.com/mastering-the-art-of-pricing-optimization-a-data-science-solution-eb8befb79425"><strong>Click Here</strong></a></p>