Understanding Intuilize's AI-powered methodology for identifying pricing optimization potential
Intuilize calculates Gross Margin Opportunity through a sophisticated AI-powered analysis that examines your historical transaction data to identify pricing optimization potential. Here's how our process works:
1. Customer and Product Segmentation Analysis
We begin by conducting comprehensive customer and product segmentation using your historical sales data. Our AI models analyze how different customer segments interact with various product categories to understand price sensitivity patterns across your business.
2. Massive Price Combination Analysis
Our AI models run millions of price combinations - for example, we recently processed over 827 million combinations for a single branch analysis. The model examines:
- Every historical transaction over the past 12-18 months
- Price sensitivity relationships between customers and products
- Quantity breaks and purchasing patterns
- Product-customer interaction matrices
3. Comparative Pricing Assessment
For each transaction, we analyze what price was charged versus what could have been charged by:
- Comparing the prices charged to similar customers for the same products using your historical data.
- Identifying underpricing opportunities where customers paid different amounts for the same items
- Establishing price benchmarks based on customer segmentation (VIP, Standard, Drain customers)
4. Ceiling Calculation Method
We calculate the "ceiling" opportunity by replacing every historical transaction with optimized pricing recommendations. This represents the theoretical maximum opportunity if every past transaction had been priced optimally. We clearly communicate this is an ideal scenario that "never happens in the real world."
Practical Opportunity Assessment
From the ceiling calculation, we work with your team to narrow down to realistic opportunities by:
- Excluding VIP and Core customers or sensitive product categories per your business rules
- Focusing on specific customer segments (typically Standard and Drain customers)
- Identifying specific product groups where pricing adjustments make business sense
- Filtering to manual pricing transactions where optimization has the highest impact
Validation and Refinement
Our opportunity calculations are validated through:
- Review sessions with your pricing and sales management teams
- Analysis of customer-specific business rules and constraints
- Consideration of competitive dynamics and market positioning
- Assessment of implementation feasibility and adoption potential
The final Gross Margin Opportunity represents achievable profit improvement based on data-driven pricing optimization while respecting your business constraints and market realities.
The Gross Margin Opportunity calculation provides the theoretical ceiling of pricing improvement.
In practice, we focus on achievable opportunities that align with your business strategy, customer relationships, and market positioning. During pilot phases, we prioritize pricing adoption and system reliability over immediate margin gains to ensure long-term success.