One of the biggest challenges that any business faces is what price to set for selling their product or service. Set your price too high and buyers will stay away. Set it too low and you risk kissing your business goodbye. But now, coming to the rescue, are a new breed of technologies.
Or so it seems.
An Educated Guess Is Still Just a Guess
I'm always fascinated by technocrats who think that technology can second-guess human nature. And the latest incarnation of this philosophy is no different. To solve the "What price should I set?" debate, recent software products use analog software to predict what a shopper will pay for a product or service. These new analog programs go under the name of price optimization or retail revenue optimization applications. These apps crunch through mountains of historical point-of-sale data and apply programmable rules and algorithms to come up with optimum pricing for products.
And these apps don't come cheap.
But the problem with any of these newfangled pricing apps is that they're flying under false colors. In reality, they're an educated guessbut still just a guessat what shoppers may or may not pay for a product or service.
This reminds me of the story of the drunk in the bar who asks every woman he sees for a kissand gets slapped for his efforts. This prompts the bartender to say dryly, "I bet you get slapped a lot." To which the drunk says, "Yeah, but I get kissed a lot."
The moral? Why not go right to the source and ask your shoppers what they're willing to pay, rather than guessing at what their response might be? And while you're at it, why not get them to compete with each other for the privilege of buying from you in the process?
And what do I mean by that? More of that later.