In today’s fiercely competitive business landscape, pricing has evolved into a highly nuanced art that demands both precision and efficiency. The traditional methods of manual pricing, once commonplace, are rapidly being replaced by sophisticated data-driven and Artificial Intelligence (AI) informed technologies. These cutting-edge solutions hold the promise of elevating pricing strategies to unprecedented heights of performance and profitability. However, there is a common misconception that these pricing AI solutions are here to replace your human workforce. Sure, pricing AI may replace your people’s jobs as they currently exist, but in all likelihood, it will transform their work and replace their jobs with better ones.
At Pricefx, with over a decade of experience as a leading cloud-native pricing software solution, including flexible and transparent AI optimization at our core, we understand the importance of clarifying this misconception.
In this article, we will explore the potential for pricing AI to redefine roles within your organization’s Pricing Department. We will also examine five remarkable ways pricing AI can bring immense value to your business without taking your people’s jobs and bust some pricing AI myths along the way.
How Pricing AI Can Reinvigorate Your Workforce Not Replace Them
It’s true that pricing AI has the potential to redefine roles within your organization. It may indeed replace certain job functions as they exist today. However, the transformation it ushers in is far from a simple case of job displacement. Rather, it represents a profound shift in the nature of work itself. Pricing AI is not here to eliminate jobs; it is here to augment, enhance, and redefine them. It is about empowering your workforce to excel in ways that were previously unimaginable.
Instead of relegating employees to routine, mundane tasks, pricing AI liberates them to focus on what truly matters: creativity, innovation, and strategic thinking. As routine pricing processes are automated, your team is freed from the burden of repetitive work. Many pricing teams are spending all their time reacting to cost increases and don’t have the bandwidth to focus on more value-add work.
With pricing AI and automation, they can redirect their talents and energies toward higher-order tasks that require uniquely human skills, such as understanding customer needs, devising ingenious pricing strategies, discovering new value points, finding the “golden nuggets” of price and profit opportunities your business never previously knew existed and building lasting client relationships. In essence, pricing AI does not replace your workforce, it reinvigorates it, empowering your people to contribute more meaningfully to your organization’s success.
So, while pricing AI may redefine job roles, it does so with the aim of creating better, more fulfilling, and more rewarding positions for your employees, with the bonus of elevating the Pricing Team from a tactical, reactive role to one of a key strategic business resource.
Understanding the Misconceptions of Pricing AI: Beyond Automation
Before delving into the incredible capabilities of pricing AI, let’s grasp what it means in the context of pricing.
As far as we are concerned at Pricefx, pricing AI is all about continuously investing as the technology grows and evolves. From machine learning and neural networks to agent-based AI and now generative AI, we continue to pursue AI innovation to drive value performance for our customers. Our focus remains on being Fast to value with our productized use cases, Flexible with our composable Bring Your Own Science Optimization capability, and Friendly with our clear-box AI that allows your team to see exactly how optimizations are designed and executed. No other pricing optimization technology offers our kind of rapid value impact and long-term scalability and transparency.
Possible factors that are considered in AI optimization are: competition, season, historical prices, time of the day, special events, operating costs and many more besides. All these factors will be key in predicting the price of a product or service at a certain point in time.
But importantly, Pricing AI continues to evolve. In 2024, Pricefx’ steady investment in AI will continue and we will introduce a new set of conversational Generative AI (GenAI) capabilities (similar capabilities to Language Learning Models (LLMs) like ChatGPT, Google Bard or Bing Chat), built directly into the Pricefx product and platform.
These will debut as an enhancement to our existing Actionable Insights Capability. Deploying a tailored and open source LLM technology, our GenAI Actionable Insights will enable a natural language-based processing and generation to create and serve prescriptive and predictive insights that users can leverage to quickly identify opportunities and risks that have the biggest volume, revenue, and margin impact for the company.
With Pricefx, GenAI LLM capabilities are also now part of our product Knowledge Base, enabling natural language chat-based search and discovery for the entire online training and education website for Pricefx products and services, and in our Product Similarity Accelerator to identify substitute products to upsell and cross sell.
In its most simplified essence, pricing AI empowers businesses with automation, complex pricing analysis and an intuitive user experience making it possible to tackle challenging pricing goals with the utmost in efficiency.
To dive in a little deeper to how AI works in pricing software, check out the handy article below:
Why Pricing AI Can Make Your Pricing More Intuitive & ‘Human’
Despite the incredible potential of pricing AI, some misconceptions linger, often fueled by a fear of job displacement. It is crucial to address these misconceptions and recognize that pricing AI is a powerful tool that complements your workforce rather than replaces it in equally intuitive and human ways, such as:
Hyper-Personalized Customer Engagement
Pricing AI, driven by machine learning delves into customer spending patterns, behaviors and buying reasons eliminating the one-size-fits-all pricing logic, critical for building a value-based pricing strategy. It takes note of individual customer behaviors and factors, ensuring that each customer pays the optimal price based on their willingness to pay.
This level of personalization enhances customer engagement and drives higher satisfaction. With historical sales and online data at its disposal, AI enables businesses to create tailored offers, maximizing customer interactions.
Creative Data Utilization for Optimal Pricing
Pricing AI opens the door to an expansive array of data sources that can provide insightful and accurate pricing guidance. Beyond the usual suspects like customer data, product data, and sales history, AI can dive into more granular variables. Imagine incorporating factors such as weather and seasonality to adjust prices for weather-sensitive products, fine-tuning pricing based on the day of the week or time of day, factoring in special events and holidays, or leveraging search engine activity to set the perfect price point when demand is at its peak.
Continuous Learning and Improvement
Pricing AI is designed to learn and adapt intelligently over time, reducing the need for extensive human intervention. With the right data and parameters in place, AI can analyze past pricing decisions, experiment with alternative pricing scenarios through simulations, and deliver repeatable pricing successes. This eliminates the costly trial-and-error approach and guesswork inherent in manual systems. Moreover, pricing AI’s strength lies in its adaptability, allowing you to refine your models with real-time data to respond to market fluctuations or disruptions effectively.
Dynamic Pricing for Efficient Capacity Management
For business reliant on dynamic pricing, AI-powered algorithms can optimize workforce capacity in real-time. Companies in the sharing economy, like Uber, employ AI to manage demand through surge pricing. Similarly, manufacturers might also use the same ‘Uber surge model’ to look at how their production capacity should influence their pricing (e.g. high demand, low capacity = higher prices).
By recalculating prices on the fly, AI ensures that the platform isn’t overwhelmed, benefiting both customers and drivers. This capacity management can also apply to other industries, maintaining a balance between supply and demand for maximum productivity.
Granular Insights for Hidden Opportunities
One of pricing AI’s most significant advantages is granularity. It enables businesses to scrutinize pricing metrics at a micro-level with minimal effort. For instance, a car parts manufacturer struggling with pricing strategies can use AI to segment its sales data into distinct customer and product groupings. This approach provides optimal prices for each subsegment, revealing insights that might have remained hidden with traditional pricing methods. These granular humanized insights empower businesses to tackle challenges strategically and with precision.
The Top 5 Reasons Why Pricing AI Will Not Take Your People’s Jobs
1. Collaboration, Not Replacement
Pricing AI is a collaborative partner for your pricing teams, not a substitute. It augments your employees’ capabilities by handling complex data analysis, automating repetitive tasks, and providing data-driven insights.
This constructive collaboration allows your team to focus on strategic decision-making, creative problem-solving, and building customer relationships.
2. Human Expertise Matters
While pricing AI can process vast amounts of data and identify patterns, it lacks the human touch. Human pricing professionals bring context, intuition, and an understanding of the broader business landscape that AI alone cannot replicate.
Your team’s expertise in understanding market dynamics, customer behavior, and the intricacies of your products is invaluable.
3. Adapting to Market Dynamics
Pricing AI is not a static solution; it thrives on data and adapts to changing market dynamics. In uncertain times, such as economic fluctuations or supply chain disruptions, human judgment becomes essential. Your team can guide AI models to incorporate real-time data and respond swiftly to unprecedented challenges.
4. Strategic Decision-Making
AI excels at optimizing routine pricing decisions, but it is your pricing team that defines the strategic direction. They set the pricing objectives, customer segmentation strategies, and long-term pricing goals. Pricing AI acts as a powerful tool to execute these strategies efficiently.
5. Enhancing Customer Experience
Ultimately, pricing AI is a means to enhance customer experiences. Your team’s understanding of customer expectations, preferences, and evolving needs is irreplaceable.
Pricing AI can help tailor pricing and offers, but it is your team that builds lasting customer relationships.
Augmenting, Not Replacing
Now you know that pricing AI is a transformative technology that empowers your pricing teams, amplifying their capabilities and efficiency. It does not replace jobs; it enhances them. By embracing pricing AI, your organization gains a competitive edge, harnessing data-driven insights to make smarter pricing decisions.
The future of pricing is collaborative, with humans and quality pricing AI (such as Pricefx uses in their pricing software solution) working together to achieve pricing excellence.
So, fear not; your people’s jobs are safe, and their potential is limitless with pricing AI by their side.
To learn about real threats to the jobs of your people, check out the article below to discover all about the costs of remaining inert (and not using pricing software) in your enterprise business and the potential extra money you could be earning for your business every day:
Happy Pricing!