Jerome Laurent, Co-Founder, President & CEO, Guillaume Tujague, Co-Founder & CPO
“Pricing is a significant growth lever that seems to be underpowered in retail and e-commerce,” begins Jerome Laurent, co-founder and CEO, PricingHUB, as he touches upon the benefits dynamic pricing can bring to physical stores. According to Laurent, many pricing players use or claim to use AI to scale pricing strategies. “However, instead of technology, the methodology should be the core of the pricers’ consideration. Technology is here only to power a methodology. If the methodology is weak, technology will not deliver good results.” As a seasoned entrepreneur, Laurent draws on his experience in the travel industry to help retailers optimise their pricing strategies and improve growth profitability with machine learning and big data. Laurent leads his team at PricingHUB to assist the retail and e-commerce sectors leveraging price elasticity to move out from competitive based pricing.
While organisations lack the pricing expertise and maturity to support the dynamic AI-based pricing implementations and thrive in the market, PricingHUB intends to change this narrative. Governed by the mission to bring dynamic pricing to physical stores by leveraging a blend of real-time customer data and machine learning algorithms, PricingHUB helps retailers understand price elasticity and drive better pricing decisions. PricingHUB empowers clients with a unique and interactive methodology— ‘experimentation/elasticity exploration’—an outcome of reinforcement learning and constant software testing, instead of forecasting. This methodology is deployed in a SaaS platform that assists the clients in transitioning from competitive pricing to trading-based pricing that leverages elasticity. With an interactive and simplistic UI bundled with pricing elasticity, PricingHUB ensures its clients understand the methodology behind the algorithms and avoid the Black Box effect. The firm also simplifies the tedious data access processes of closed BI systems containing heterogeneous data by selecting an appropriate KPI to represent profit margins and cleanse the data. PricingHUB leverages the business understanding and pricing expertise of its highly skilled team of DS programmers, architects, mathematicians, and physicians to model, scale, and automate pricing for different profiles.
That’s not all; PricingHUB constantly measures the performance of its pricing decisions versus a neutral control group to test a range of price points, which enables the clients to proactively counter their competitors’ price changes. What truly sets PricingHUB a class apart in the market is its capability to cross datasets that none of its clients have ever crossed before. This plays a vital role in simulating the impact of the clients’ business goals on their P&L (revenues, profits, and volumes). Besides this robust ability to provide fair and accurate measurements of isolated pricing performance, PricingHUB deploys its elastic pricing solution in a simple three-step methodology— understand, learn, and optimise—for business targets achievement. The first step involves deep-dive sessions to understand use cases based on historical data. This mitigates the hurdles of defining relevant workaround and sustainable solutions, and communicating all assumptions.
Governed by the mission to bring dynamic pricing to physical stores by leveraging a blend of real-time customer data and machine learning algorithms, PricingHUB helps retailers understand price elasticity and drive better pricing decisions
In the second step, PricingHUB learns and iterates clients’ pricing with regards to their overall business constraints and assesses the granular “elasticity curve.” In doing so, the company eliminates the challenges of cannibalisation and noise effects with faster implementation capabilities, time to learn, and simplified business constraint management. Lastly, the firm drives price iteration towards the clients’ targets by empowering them to be relevant, fast, and sustainable with a granular and massive pricing implementation. Additionally, PricingHUB diligently imparts valuable pricing education to its clients and explains the mechanisms derived from using price elasticity as a decision factor.
PricingHUB’s three-step methodology yielded significant results when the firm assisted one of its clients in transitioning from competitive-based to dynamic AI-based pricing. Upon interaction, the firm’s specialised team understood the client’s business goals and constraints and automatised the data lake. PricingHUB ensured the client learned a smart way to construct elasticity curves for each product category over six weeks of rigorous price variation tests. Once the new goals and constraints per category were set, the client could efficiently validate and implement daily pricing recommendations and monitor performance via PricingHUB’s extensive performance framework and dashboards. The firm’s dynamic pricing solution allowed the client to access, discover and leverage price elasticity of their products by matching competitors, and implement an informed pricing decision. “From steering top lines through promotions to trading, the client utilised our simulation tool to make informed pricing decision for their products, and effectively automated the management of P&L per category,” explains Guillaume Tujague, co-founder & CPO of PricingHUB. In addition, PricingHUB’s ability to set balanced price points and a sound pricing strategy increased the client’s profit margin concerning the business constraint along with a significant improvement in ROI.
While similar success stories fuel PricingHUB’s reputation in the market, the firm continues to invest in R&D of reinforcement learning and harnesses the ‘assemble models approach’ to surpass other pricing models. As Tujague puts it, “There is no use case where one pricing model can be the winner in every context. The most appropriate model is defined based on multiple decision criteria such as accuracy and speed (arbitrage).” In addition to delivering the benefits of digitalisation to physical stores through dynamic pricing, PricingHUB is all set to transform the future of pricing on a four-axis development plan: algorithm accuracy, automation and usability, features, and accessibility for physical stores. This plan will enhance value creation of pricing algorithms, accuracy, speed, UI simplicity, price updates via digital labels, and computing elasticity to boost market coverage with numerous SaaS applications such as inventory, multi-product pricing, and merchandising.