Price Optimization Software Big in Retail Business

prostoalex writes "Even if you spent only a single day in an economics class, you're probably familiar with a concept of supply and demand. The Associated Press is running an article on retailers employing mathematical models for price optimization, where some products are priced higher to generate higher margins, and some are discounted to generate larger volumes even at the expense of per-product margins. DemandTec, Oracle and SAP are some of the companies producing those mathematical models for retailers around the country, with AP listing some of the pricing optimizations employed currently."

Comments

Re:Watch out for customer "value" cards

[wkitchen]

And how is that going to affect buying decisions when the buyer doesn't know about it until checkout time?

If the gallon of milk is marked $4.99 on the shelf, the customer who is unwilling to pay more than $3 is not going to put it in his cart. That the store plans to discount it to $2.99 at the register won't change that. And if the customer is willing to pick up the $4.99 milk, what incentive is there for the store to charge less for it?