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Essential Retail Pricing Skill Evolution: From Science to Strategy


Written By: Gargi Sarma 


Pricing and analytics skills in the past needed in-depth technical knowledge and a solid comprehension of intricate mathematical models. Pricing experts have to be skilled in developing complex pricing models, analyzing data, and designing dashboards. But the pricing sector has changed significantly over the years, with the emphasis now being on adopting standardized, automated methods that make it possible for even people with little technical expertise to succeed rather than developing and comprehending intricate systems. This transition is similar to what is happening in other sectors of the economy, such as the transportation and automobile industries.


Figure 1: Evolution of Pricing


The Shift from Building to Using: Car ownership in the 1950s and 60s needed a high level of mechanical understanding. Car owners required to know how to add oil, change spark plugs, and do basic maintenance to keep their cars in good working order. The emphasis moved to usability as the car business developed. Drivers were able to concentrate on driving instead of car maintenance as cars grew more dependable and easier to service. The procedure has been made even simpler by ride-hailing applications like Uber, which allow users to go from point A to point B without even owning or being able to operate a car.


There has been a comparable change in the pricing sector. Pricing analytics initially required a significant degree of skill. Professionals with substantial training in statistics, data science, and mathematics were needed to create and manage intricate pricing models. Technology has advanced over time, and the creation of pre-built tools has allowed users to implement sophisticated pricing schemes without having to comprehend the underlying principles.


Market Overview:


The rise of user-friendly pricing tools is reflected in market statistics. According to a 2023 study by Forrester Research, the market for cloud-based pricing tools is expected to reach $12.7 billion by 2026. This surge in adoption underscores the growing demand for accessible and intuitive pricing solutions.

  • According to a McKinsey report, 70% of companies consider pricing analytics a top priority.

  • The global pricing analytics market is projected to reach $10.9 billion by 2026, growing at a CAGR of 20.5%.

Standardization and Automation:


The standardization and automation of today's pricing systems has reduced the need for highly analytical abilities. Advanced algorithms and user-friendly interfaces take care of the heavy lifting on platforms like RapidPricer. Without getting into the complexity of data analysis, these tools let users input data, select settings, and get practical pricing recommendations.

Figure 2: Operations-Related Benefits Retailers Have Experienced From Automation in Stores


For example, a shop manager no longer has to have experience with analytics to utilize a technology like RapidPricer to modify prices depending on competitive pricing, real-time market conditions, and customer behavior. Large volumes of data are analyzed by the platform's algorithms, which then produce optimum pricing plans and free the manager to concentrate on making strategic decisions rather than tedious data analysis.


Real Examples:


  • Dynamic Pricing Algorithms


Then: Retailers manually adjusted prices based on intuition or historical data.

Now: Dynamic pricing algorithms continuously optimize prices based on real-time market conditions, competitor prices, and demand fluctuations. For instance:


  • Airline Tickets: Airlines adjust fares dynamically based on factors like seat availability, booking time, and seasonal demand.

  • E-commerce: Online retailers tweak prices instantly to maximize revenue while staying competitive.



  • Chatbots and AI-Powered Assistants


Then: Customer inquiries required human intervention.

Now: AI-driven chatbots like ChatGPT can answer pricing queries, recommend discounts, and guide users through purchasing decisions. These tools democratize access to pricing information.


  • Subscription-Based Pricing Models


Then: Subscriptions were limited to services like magazines or cable TV.

Now: Subscription pricing extends to software (e.g., SaaS), streaming platforms (Netflix, Spotify), and even physical products (e.g., meal kits). Consumers pay a predictable fee for ongoing access.


Future Possibilities:


Artificial intelligence (AI) and machine learning will probably be further integrated into the pricing sector as technology develops. With the help of these technologies, pricing tools will be even more capable of allowing precise and flexible pricing schemes. AI-driven technologies, for instance, might examine consumer behavior trends and forecast demand with extreme precision, enabling companies to proactively modify prices.


Furthermore, the emergence of conversational AI—like ChatGPT—has the potential to completely change how companies use pricing tools. Users might ask a virtual assistant comprehensive questions regarding pricing plans, and the AI would respond with concrete advice, saving them from having to navigate complicated interfaces. This would completely change the focus to strategic decision-making by making pricing optimization even more approachable for non-technical consumers.


Figure 3: Generative AI in Data Analytics Market (2022 - 2032)


The graph shows the rise of generative AI in the data analytics market from 2022 to 2032, and highlights the potential of AI in the pricing sector going forward. As seen, the market is anticipated to grow considerably, highlighting the growing significance of AI in data-driven decision-making. According to this tendency, pricing tools' accessibility and ongoing progress will be greatly aided by the use of generative AI technologies.


Conclusion:


In summary, the pricing sector has experienced a dramatic shift, going from a field that demanded in-depth analytical abilities to one where strategic simplicity now rules. Pricing has become more accessible because to automated tools and established procedures, which even those without much technical knowledge can use to implement sophisticated pricing techniques. Strategic decision-making will become more and more important as technology develops, helping organizations to remain competitive in a market that is constantly changing.


About RapidPricer

RapidPricer helps automate pricing and promotions for retailers. The company has capabilities in retail pricing, artificial intelligence, and deep learning to compute merchandising actions for real-time execution in a retail environment.

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