Price Optimization

What is Price Optimization?
Price optimization is the use of data analysis and mathematical models to find the price point that best achieves a business objective — maximum profit, maximum revenue, target volume, or market-share growth. Unlike simple competitor matching, optimization weighs demand elasticity, costs, inventory, seasonality, and competitive position simultaneously.

In e-commerce, price optimization models are usually trained on historical sales at different price points and enriched with live competitor data from price monitoring feeds. The output is a recommended price (or price range) per SKU that can be reviewed by a pricing manager or pushed automatically into a dynamic pricing engine.

The distinction worth remembering: dynamic pricing is the mechanism that changes prices frequently; price optimization is the logic that decides what those prices should be.