With the tough competition and the growing power held by e-tailers nowadays, customers can simply sit
back and let the various chains compete for their attention and money. Moreover, the fact that it is so easy to compare prices
via the Internet means that customers are better informed and more aware. As such, optimum pricing is crucial for all retailers
What does this entail for retailers?
Retailers need to understand the effects of their pricing. The same applies to the consequences of
changes in their marketing mix. All price adjustments should be carefully considered and tested thoroughly through the
entire chain, and their effect on profit needs to be evaluated. This allows you to optimize your profit and estimate future
The Veneficus team has extensive experience with re-pricing analysis. Many retailers in fashion, DIY, and
FMCG benefit from the use of our tools to optimize the prices of their products. The same applies to multibuy
deals. As it turns out, proper analysis and optimization of pricing results in a 20% profit margin
How do we do this?
An experimental framework prevents you from making bad decisions on large scale! For offline retailers,
setting up an experimental framework simply means changing prices in a small group of representative stores.
The results are then compared to the other stores. The results of the comparison are then used to decide whether
a price change should be implemented.
Veneficus can help you to:
- select the right experimental stores
- find the best reference stores
- optimize your pricing
By finding similar stores, and analyzing historical sales patterns in those similar stores and the stores
where price tests are performed.
An intelligent store-benchmark selection makes it possible for you to see the invisible, so-called counterfactuals,
i.e. what would have happened if the price had remained unchanged?
Sales in the experimental stores are compared with sales in the benchmark stores. The price increase leads
to a considerable sales decline in the experimental stores when compared to the benchmark. The exact extent of this
decline compared to the price increase is shown in the graph on the right (both are in euros).
Counterfactuals allow us to calculate the relative changes in volume for each relative price change. The
result is the overall impact on profitability.
The answer could be:
“This price increase being considered is a very good idea, because the expected drop in sales will
be offset by the higher profit margin.”
This might also indicate:
“There is room for further price increase.”
Experimenting with the price of multibuys can allow you to detect shifts in demand:
“Customers will start buying single items instead of double packs, because at higher prices,
they consider those double packs to be too expensive.”
It also possible for the experiment to indicate the following:
“The proposed price change will result in a loss of profits, regardless of what the profit margin is.”
More than just an experiment
Thanks to this automated process and our simple approach, Veneficus re-pricing tools are not limited to just one
experiment. With the right experimental design, models can be reused for price increases after future price testing. You can
use these tools yourselves in your day-to-day business operations. They indicate your optimal choices while requiring only
Are you curious about what we could do for you?