What is Price Optimization?
Price optimization is the process of using data from customers and the market to predict the outcomes of different pricing strategies. This helps to generate the most effective price to maximize sales or profitability. To balance revenue, retention and growth, you have to understand how much your customers are willing to pay.
Willingness to Pay (WTP) is the maximum price at which your customers will likely buy – making it a crucial factor in setting the best price while also meeting company objectives such as increasing profit margins, customer growth or both. Historically, WTP was difficult to calculate, requiring a lot of data. New advancements in Artificial Intelligence (AI) have changed this.