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What is price optimisation?

Price optimisation

This is a way for companies to work out how much they should charge for their products or services. It involves using data to work out how customers will respond to different prices and which will best meet the company's objectives.

Where have you heard of price optimisation?

If you're in business, you might have come across it - price optimisation is widely used across a number of different sectors including retail, insurance, banking and travel firms such as airlines and hotel companies.

What you need to know about price optimisation.

It comes in many different forms across different industries, but the overall aim is to ensure companies make money and match supply to demand. Methods of price optimisation include surge pricing, as practised by companies such as Uber. This involves the company increasing prices at times of higher demand, for example during the rush hour. For retailers, price optimisation may include matching competitors' prices on some products while increasing the margin on items only they carry. Data used in price optimisation includes historic sales and pricing data, as well as operating costs.

Find out more about price optimisation.

One aim of price optimisation is to maximise operating profit. Find out more about what this means.

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