Getting the price right with AI

Gen AI goes beyond just language models, as Dominic O’Regan from PROS will demonstrate this Thursday during the IFFI Masterclass ‘AI in Commerce’. Companies can also use AI as a tool for determining prices. “Without the ‘hallucinations’ that language models are known for.” That’s promising!

O’Regan also aims to debunk another myth. “Many companies delay AI implementation because they think they first need to get their data in order. It’s often said that this is a prerequisite. That’s nonsense, at least in part. When you use a good AI model, the model knows which data is reliable and which is not.” His advice is not to wait too long with AI implementation, as there’s much to gain. For instance, AI can help you determine the right price for your products. “Companies often look for where their margins are disappearing and how to prevent that, while they could also simply raise their prices. That leads to profit much faster.” According to O’Regan, companies are often afraid to increase their prices. They prefer not to raise prices too quickly and typically only do so once a year. “However, research shows that customers prefer more frequent but smaller price increases. Customers find price increases less annoying than you might think.”

Painting positive pictures
AI has the potential to be responsible for significant changes in society. “The question is: should we be afraid of that? There are pessimists who paint a grim picture of a world with AI, but I’m one of the optimists. This technology could bring about a bigger change to society than the industrial revolution. In the long run, society will change, and we will either work less or do different types of jobs. Most major societal changes have been good news for the majority, though there are always people who suffer as a result.” While jobs might disappear in the medium term, a new role will emerge in the near future. “Data scientists will become very important.”

Revenue
Back to AI in commerce. With the help of AI, you can determine the right price for your product, O’Regan says. But how? “The system uses all the data from successful negotiations. Deals are often closed below the price the customer was willing to pay. Data from failed negotiations is often not retained, but AI can estimate it. This way, you arrive at the best price. That can quickly save a lot of money, even when working with long-term contracts.”

Without examples this may seems magical. However, O’Regan promises to make things clearer during his lecture with examples, charts, and tables. He himself became captivated by the use of AI in commerce a few years ago, and by the models that can be built for this purpose. “I began to delve into neural networks, which are the foundation of the models.” According to O’Regan, PROS is by far the largest player in the field of software and AI models for pricing and selling products. “We’re not just saying that; it’s backed by research.”

More info: https://pros.com/

Dominic O’Regan
Senior Strategic Consultant at PROS