Jun 10, 2019
Why you have to check out today’s podcast:
- Discover the concept of dynamic pricing to help you keep pace with constantly changing market dynamics
- Learn how to maximize your business ‘profit with predictive analytics and powerful artificial intelligence (AI) pricing strategy
- Know the definition of artificial intelligence (AI) and machine learning
Alexander Shartsis is the co-founder and CEO of Perfect Price, an artificial intelligence (AI) company empowering companies to make better decisions about pricing, profitability, and utilization. He is an entrepreneur and executive with a background in business development, sales, product, and engineering. He is a member of the Forbes Technology Council. He wrote a book called The Ultimate Guide to Pricing Strategy: A Playbook for Behavior-Based Pricing and Promotions. Alex holds an MBA from the UCLA Anderson School of Management, an MSc from the London School of Economics, and an AB from Dartmouth College.
In this episode, Alexander shares his expertise in the dynamic pricing model, which industries use it, and will it be harder to use it on a subscription type of business over the traditional ones? You’ll also get to understand the concept of artificial intelligence and machine learning and how they are associated with pricing strategies. Further, learn how his company, Perfect Price, delivers artificial intelligence for pricing that will significantly impact your company’s revenue.
“Always put yourself in the customer's shoes or just out of your own world of being a pricing professional and try and think about it differently. And maybe you'll come to the same conclusion or maybe you'll, you'll have an epiphany and think about things totally and differently. Letting go of your assumptions and your conviction of being right about how you're doing things today is a really powerful tool.”
– Alexander Shartsis
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Topics Covered:
01:32 – Alexander’s shares how his focus in bringing technologies got him into pricing
03:20 – The concept of dynamic pricing
05:08 – Car rentals and car manufacturers as examples of industries which use dynamic pricing
09:28 – Two ways to achieve dynamic pricing: demand-based pricing and market trend
12:25 – Gathering outside data to predict demand or willingness to pay
13:10 – The overlooked significance of a company’s own data – actual purchase data and web traffic data
17:24 – Example of an AI pricing strategy
18:20 – Definition of AI (artificial intelligence) and machine learning, and specifying Google Translate as a good example
22:34 – How Alex’s company, Perfect Price, provides data with the companies to get the results they want
25:23 – Difference of subscription business from the traditional types in terms of dynamic pricing
27:41 – A piece of pricing advice from Alex – “Be really open-minded about pricing. It's really easy to get emotionally attached to the way you've been doing things.”
Key Takeaways:
“It becomes much more about, how are you framing the problem? And I think the key difference with AI is learning from the data, as opposed to making a bunch of human understandable assumptions.” – Alexander Shartsis
“The thing that's almost always overlooked by companies is their own data.” – Alexander Shartsis
“In our opinion, wherever you're running an AI pricing strategy, you do need some human control over it.” – Alexander Shartsis
“It's hard to do dynamic pricing for anything where the consumer or buyer really has a solid expectation of price. And that can be subscriptions.” – Alexander Shartsis
“It is so often that we start down some path for whatever reason. It's easy as a startup company. We price it this way, and that's mostly internally focused, not externally focused. And as soon as we step back and start thinking about customers and willingness to pay and how it changes in situations, suddenly, we have so many more doors, so many more levers we can pull.” – Mark Stiving
Resources mentioned:
The Ultimate Guide to Pricing
Strategy: A Playbook for Behavior-Based Pricing and
Promotions
Connect with Alex Shartsis:
Connect with Mark Stiving