Want to know the best price to give shoppers? I don’t. That may not sound very responsible. I used to want to know the best price to show each visitor. But, for me… well, I just don’t have space in my head for it anymore. Customers are too different for me to even try.
Each one responds in his own unique way to a different price.
Imagine that one of my customers is from Los Angeles. He’s from a wealthy neighborhood, not a poor one. He’s logging in during the middle of the night, not the middle of the day. He’s surfing on a Mac, not a PC. There are lots of other things that I know about who this customer is and who he isn’t.
All of that information is used to decide on the price that will have him spend the most money. Sometimes that’s a lower price, sometimes higher. Like, it turns out, that lower prices perform better (make more revenue overall) in wealthier neighborhoods. But when you add together all the things that we know about him the higher price may make more.
Whether he purchases or not helps us decide on the best price next time we see someone like him. If he does make a purchase then that is just one data point. I also need to look at the subsequent purchases. Those upgrades and rebills are also a function of the price. It can take months to see the effect.
These interactions with customers are happening fast – many times per second – and there are lots of them (millions and millions). There’s really no way that I can can use my brain to know the best price for this specific visitor from a wealthy part of LA, on a Mac, at two in the morning, etc. It doesn’t make sense to use my mental energy to figure it out.
Years ago we began developing artificial intelligence (AI) to do the job for us. If a computer is a bicycle for the mind, AI is a TRON Lightcycle. It takes us much further, much faster and in many more different directions than our own spreadsheet-assisted minds ever could. It does the work of figuring out the best price for each shopper: millions and millions of times over.
Developing artificial intelligence does make sense for us to do. It’s a good use of our time. But trying to figure out the right price on my own for each customer? Nope. I’m not interested. I wouldn’t be any good at it. My brain simply can’t beat the machine.
We developed a demo to show how our AI does dynamic pricing. It uses real data from millions of shoppers to the industry’s leading sites. Hit us up to check it out: firstname.lastname@example.org