Constellation ShortList™ Price Optimization Solutions

Price optimization solutions allow organizations to predict how buyers will react to different price points and pricing models. These optimization models often use big data, predictive ana- lytics, machine learning and artificial intelligence tools to craft initial pricing, promotional pricing, discount pricing and substi- tute pricing. Constellation estimates that the software market will be $3.0 billion by 2029 with a 14.8% CAGR.

Optimization begins with customer segmentation. Using dif- ferent attributes such as channel, time of day, location, etc., math is applied to determine what constraints can be included in the optimization process. Optimization strategies can be determined by understanding the pricing problem as yield man- agement, markdowns, list pricing, customized pricing, etc. This year’s new requirements include tighter integration with order orchestration systems and CPQ. Expect new features such as better recommendations and next-best action to be table stakes by 2030. As systems integrate with automation and AI, users will expect greater mass personalization at scale and dynamic scenario generation.

This list mixes both business-to-business and business-to-con- sumer solutions. Constellation believes many of the vendors started out in one mode and have customers in the other as B2B and B2C converge to P2P networks.

Threshold Criteria

Constellation considers the following criteria for these solutions:

• Support multiple pricing models
• Enable complex promotion rules
• Manage price lists
• Prescribe pricing segmentation
• Facilitate markdown scenarios
• Deliver dynamic pricing
• Provide advanced analytics
• Create pricing optimization models
• Collect competitive insights
• Apply machine learning and artificial intelligence to identify, learn and predict new models
• Integration with CPQ and order orchestration systems