Understanding Velocity-Based Pricing – A Preliminary Investigation

March 2013 Pricing

In the age of big data, sales velocity has become a metric for guiding pricing decisions. Pricing software vendors all cite sales velocity as an important factor in guiding pricing decisions. Fortune 500 and mid-tier firms alike are known to practice it. But what does velocity-based pricing mean? Why should sales velocity influence pricing decisions? How should firms use sales velocity to inform pricing? And are there serious pitfalls to this approach, or is it a sound business practice?


Economic Price Optimization with Locally Measured Elasticity of Demand — Unreliable

March 2013 Pricing 4 Comments

Theoretically, if you know the elasticity of demand you can optimize the price through economic price optimization. You may think that this approach would give the best price in practice as well since the word “optimal” is implied in its name alone. But dig beneath its sexy title you will generally find an ugly mess. So what do we do with it?


A customer checks you out …

  1. How did he know you existed?
  2. What brought him to you? How do you get more like him?
  3. What does he need?  How can you meet his needs better?
  4. Will he actually buy more if the price is lower?  How much more?
  5. How easy is it for him to choose you?  How can you make it easier for him to buy?
  6. Did he buy?   Was he satisfied?  Will he come back?