eCommerce & Merchandising

IBM Dynamic Pricing – It’s a bird, it’s a plane – no, it’s pricing at the speed of Dynamic Pricing

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In our world today, it’s all about speed.  How fast is your internet? How fast did you respond to a text message? Who ran the fastest mile?  What if in your daily work life, we could make intelligently pricing your products easier and faster?

Even better, what if you can have speed and you can reach your business goals for revenue, profit, and margin? What if you can have the right price at the right time for the right customers?

Take a look of how we do pricing at the speed of digital.

With Dynamic Pricing, after you load up all your data, you create your pricing strategies. Each strategy is directed at certain products and you add rules to help drive pricing recommendations.  Let’s take a look at what approving a price looks like in Dynamic Pricing.

In the following example, we are using the sample data and sample strategy provided with the trial offer.

First, let’s review the sample strategy called All Batteries – Rules Pricing.

Pricing strategy definition:

  • Rule based pricing
  • Product group is defined as All Batteries
  • Schedule is based on a start date of Jan 1, 2017
  • Automatic approval is not enabled, so you will need to manually approve pricing recommendations.

Now let’s take a look at the Price rules.

In this strategy, the merchandiser shows their business priorities by placing the Line Price rule above all others.  This ensures that as prices change, all those products attributed together in a Line group will be priced the same.  For example, all two liter flavors of the private label soda might all be priced the same at $1.19, or all colors of a name brand polo shirt would be $37.83, etc.  This matches the expectation of most consumers that similar products of a single brand should be priced the same if the difference is only color, scent, flavor, or (clothing) size.

Next the merchandiser decides that any products whose price has been ‘locked’ by the retailer, will not change during the pricing process.  This ensures that products with a known or specifically desired price won’t accidently be changed during this process.

Now, some Competitive rules follow.  One focuses on only batteries from RayIBat brand which the merchant needs to be priced within 3% of Competitor 2.  Competitive rules, and many others, can be applied to a specific sub set of products within the overall strategy product group.  We can do this by utilizing creating product groups.  A second Competitive rule is used to ensure the retailer’s strategy of pricing at least 3% below Competitor 1.  By placing the two competitive rules in this order, if there is a conflicting direction on how to price any of the RayIBat batteries, it will always choose to comply with the higher-ranking rule and produce a price recommendation within +/-3% of competitor 2.

The final rule, Price Rule SKU Limits, strives to guide price changes within a specific boundary.  However, higher ranking rules may “relax” this rule and allow for a larger price change if needed.

Now that we finished reviewing the definition, let’s move on to Prices, and let’s see what price changes have been recommended by the strategy.

This is the tile view.

This is the table view:


Using the Tile view, let’s take a look at the first price recommendation.  The tile shows the high-level details at a glance.

Simply click View more to drill into the details.

On the Price change details page, you can easily modify the recommended price and see the results, before you approve the price.  Just, enter a price in the Override field and see how your margin is impacted.  Or, you can enter the desired Margin % or $ amount and the price will be calculated for you. If you like what you see, click Approve and you are done.  Or, if you need more information, then hold off on the override and move to the next tab.

On the Prices rules page, you can see how each rule impacted the price recommendation.


On the Competitors page, see how your pricing is matching up against your competitors.

On the Relationship page, you can see better understand what attributed relationships a product has and how they might influence how a price was assigned or what other products might be impacted if you override a price.

Today’s Hot Tip:  You can take the Pricing strategies basics tour from Help > Getting started.

Next up:   In the next blog, we’ll discuss how to review the trends data and key metrics in recent history.

If you haven’t signed up for the trial, then maybe you should.   You can have a free 30-day trial. You can play with the sample data we provide, or you can upload your own data.

Go here to enroll:


Information Design, Getting Started, IBM Watson Customer Engagement

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