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  • Levi Rosendall

How changing a product's price can lead to 50% sales growth.

“Have we priced ourselves out of our market?”


These were the words of a worried product manager, wondering if they had taken too drastic a pricing action for their market.


When we have an established product, we have margin targets we want to keep. We have an idea for what our customers want to pay. With rising costs, these assumptions can be challenged in a way we have not seen before.


How do we make decisions in the face of this problem?


The way we approached this problem for the product manager above used data to inform pricing changes and led to an increase in sales by 50%.


What approach did we take?


The price for this product had changed numerous times over the past few years, which was to our benefit. Selling a product at several different price points is a crucial step to finding an optimal price point. Without offering it at different prices, how can we tell what customers are willing to spend?


Knowing this, we were able to build a machine learning model to estimate the effect of pricing on product demand. This allowed us to estimate sales quantity for every price that the product could realistically be offered at.


With these estimates, it is an easy next step to calculate margin and profit at each price point. From there, we just had to find what price provided the highest profit and change the price!


So, how did this end up?


Within 3 months we had seen sales increase by 50% and profits increase by 30%.


Interested in seeing these results for your company? Let’s connect and see how we can work together to grow your business.

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