Technological advances have made multiple changes in our daily life as well as the business world. Automotive is another example that has been significantly affected by IT. The auto industry has remained to be one of the most innovative industries. The auto industry was initially focused upon mass production and Six Sigma has mastered that. Now the auto industry is using technology to focus on price optimization.
So what is price optimization? Price optimization is the most suitable and optimal price for a company’s product or service. In the economic terms. It is a series of equations that helps predict customers reaction to change in prices. The price keeps fluctuating however the ideal solution for the company is to have a high price with an unchanged demand. Although, the reality is much different where the customers would shift to a competitor selling the same product or service at a cheaper price.
So, how does price optimization impact the Auto industry?
Purchasing a car is a big investment. Paying between $20,000 or $21,000 for a vehicle is not that much of an issue however increments of $5000 will require second-guessing and more consideration. Hence it is important for the company to fix a price that covers the production costs and results in a sizeable profit as well.
In today’s world due to technological advancements, certain software is available that will help find an optimal price when all the numerical data and information are fed into its system. The professionals then analyze and choose a price.
Integrating price optimization software offers several benefits. Sometimes the costs of the raw materials vary so much that it gets difficult to fix a price that would produce good profits. The software gives you a tool that almost perfects the pricing process and is very easy to use. The software provides you with immense guidance to make a proper decision. It also gives you insight into the market and your company.