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Dynamic pricing

Dynamic pricing

Get the price right.

The traditional way to adjust pricing has been through rule-based systems: models where simple, manually inputted equations adjust prices once a day. For pricing to be truly effective, however, price adjustments need to happen much more often than that: by the hour, by the minute, or even by the customer. In other words, the pricing needs to be dynamic.

Automation in pricing gets rid of the slow, rigid rule-based models and replaces them with real-time exploration and exploitation: built-in reinforcement learning that looks at how price changes influence customer demand, and optimizes how and when to act on that information.

 

Dynamic pricing means brands can deliver the right price at the right time to the right customer. It’s a completely new, disruptive pricing method, proven to boost revenue and profitability.

 

Fourkind, part of Thoughtworks, has been at the forefront of dynamic pricing technologies for years. We’ve built some of the world’s first reinforcement learning -based dynamic pricing solutions in industries as varied as aviation, mobile communications, and hospitality. Our projects have created clearly demonstrable value, showing revenue increase between 4 to 13%, depending on whether pricing was previously made manually or by the best off-the-shelf pricing product. For our clients, we deliver revenue, profit, customer insight, and speed.

What we deliver

Revenue
Revenue

Dynamic pricing taps into the price elasticity of demand –  the price sensitivity of consumers – and maximizes revenue by either lowering or raising the price. The model is built to drive volume at all times, and does it as efficiently as possible.

Profit
Profit

The dynamic pricing system optimizes prices according to all available data, optimizing for everything from current demand and supply to competitors’ prices and significant future events. That pushes up profit.

Consumer Insights
Consumer Insights

If wanted, the dynamic pricing model can attempt to find the optimal price point for each consumer. In the process, it uncovers considerable customer insight – rare analysis that can help inform wider company strategy.

Speed
Speed

Automation allows pricing teams to respond to rapid fluctuations in demand in real time. That leaves more time for the important strategic work of what to sell and when.

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