Price Optimisation and Management

Abstract

One of the most crucial decisions a company makes is its pricing strategy. When it comes to pricing, a company must consider the present, as well as the future and the past pricing. It enables a company to make sound judgments. In the process of marketing products, price is the only factor that creates income; everything else is a cost. Guessing at product pricing is a little like throwing darts blindfolded; some will hit something, but it probably will not be the dartboard. Large-scale enterprises throughout the world still depend on Excel sheets with numerous manpower or expensive pricing solutions. Expensive pricing systems are difficult to implement for Medium and Large Sized Enterprises in countries like Sri Lanka. Our goal in this research is to propose an affordable, efficient, easy-to-use and secure solution which can be implemented in Medium and Large Sized Enterprises in Sri Lanka. Manufacturing cost, shipping cost, competitor analysis, customer behaviour are taken as the root factors when deciding the price. The proposed solution includes Machine Learning components which is fed with historical data of these four factors to predict the manufacturing cost, shipping cost, competitor price and customer behavioural factors on a given date and as well as an optimisation component which enables the opportunities to minimise the cost and maximise the profit. The four Machine Learning components are implemented using LSTM, ARIMA, Facebook Prophet and a clustering model. The optimisation model is implemented using linear programming optimise these four components. A user-friendly web application is implemented using MEAN stack with micro service architecture to access this.