|As with any technology platform, when evaluating a pricing intelligence vendor, it’s important to set up a trial period to test which vendor will best respond to your needs and determine whether they are the best long-term partner for meeting your business goals.
Here are some helpful steps for setting up a Dynamic Pricing pilot program:
STEP 1: Meet With Your Vendor to Define Your Goals
- Crawl your competitors’ pricing and stock data and your own data for analysis and to generate pricing recommendations.
- Consider crawling social likes, product reviews, ratings and page ranks to measure the market demand.
- Share and review potential pricing opportunities and possible impact.
- Define Dynamic Pricing goals and measures of success.
- Develop pricing recommendations based on competitor price, stock status, and internal data such as Weeks of Supply (WOS), closeout dates, sell-through percentage and conversion rates.
- Launch pilot program and review performance.
- Modify approach as applicable.
- Test the vendor’s recommendations by:
- Pricing more aggressively if more than four competitors are in stock.
- Adjusting prices when competitors’ prices are lower but the product is out of stock.
- Price higher or increase margins if less than four competitors are in stock or if Amazon.com is not carrying a particular product.
- Once recommendation rules are created, generate them multiple times a day.
- Periodically assess the effectiveness of the program.
- Measure the impact of pricing recommendations based on change in sales and social signals over at least a few months.
- Determine whether to proceed, end the program or expand the scope of your tests.
- If moving forward, define the scope of a full Dynamic Pricing program.
- Define the terms and finalize your contract.
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Mihir Kittur is a Co-founder and Chief Innovation Officer at Ugam. He oversees sales, marketing and innovation and works with leading retailers and brands with insights and analytics solutions around their category decisions to improve business performance.