As a retailer, you need to know how to calculate for pricing that will improve profit. You can use price optimization models to obtain those calculations.

Price optimization models calculate price elasticity, or how demand varies at different price levels. You can then combine that data with information on costs and inventory levels to recommend prices that will improve profits. These models simulate how customers will respond to price changes – supplementing your managers' instincts with data-driven scenarios.

The insight you get from these models will help you do the following:

• Forecast demand
• Develop price and promotion strategies
• Control inventory
• Improve customer satisfaction

Price optimization is especially well suited to retail businesses that have products with long life cycles, such as grocery, drug, and office suppliers.

"Price, promotion, and markdown optimization helps drive top-line profits of a company, generating revenue and gross margin as opposed to cutting costs through improving revenue and operations. For a typical company, a 1% increase in price boosts profits 2 to 3 times as much as a 1% increase in sales volume.

Bain and Company

In addition to price optimization software, these other processes may interest you:

Multichannel retailing Store management Category management Price management

Inventory management Sales order management Transportation management Warehouse management Point-of-sale software