2025-01-30

Optimized Product Pricing

If one was to sell a product or service based on a voluntary pricing scheme. Just like the books for the data science specialization, products can be offered in a pay what you want model. Using this data, it is possible to set a price point for a second edition that maximizes profit.

Assmuptions

  • The data will follow a Gamma Distribution
  • The sample is an actual representative sample
  • Those willing to pay more, will pay the lower price point

Sample Data

data <- rgamma(30, shape = 5, scale = 4)
summary(data)
##    Min. 1st Qu.  Median    Mean 3rd Qu.    Max. 
##    5.89   11.85   17.13   17.72   21.09   33.87

Slide with Plot

With an example distribution, the goal would be to maximize the price, multiplied by the percentage of sales that one would attain at that price.