Zach’s Garage case study (price optimization)
Zach’s Garage (price optimization) Try it! Zach (once a musician) opens a garage where bands can perform and fans can enjoy the music (for free)
Based on the well-known Gabor-Granger pricing method, Enginius plugs simple willingness-to-pay survey data into an optimization algorithm, and suggests price levels that will optimize sales, revenues, or profits. Fixed and marginal costs are taken into account.
The Gabor-Granger model allows you to identify the price level that will maximize revenue. By specifying market size, fixed costs and marginal costs, you can also identify the price levels that will maximize gross or net margins.
$183.17 might be the optimal price suggested by the software, but no company is going to price its product at $183.17, right? Enginius will automatically identify rounded prices around the optimal solution, and rerun the simulations at these more realistic price levels, to provide more accurate and realistic predictions.
Zach’s Garage (price optimization) Try it! Zach (once a musician) opens a garage where bands can perform and fans can enjoy the music (for free)