Interpreting the Pricing Model Results
The following results are from the OfficeStar Tutorial data set that loads automatically when you select the Tutorial link in the Enginius Dashboard and run with analysis parameters indicated in Running a Pricing Analysis article.
Pricing uses 4 different models which differ in the way the influence of price is encoded as shown below.
- Likelihood = F (price)
- Likelihood = F (price, log(price))
- Likelihood = F (price, sqrt(price))
- Likelihood = F (price, log(price), sqrt(price))
Enginius reports the fit for all of them and keep the best fit automatically.
As the screen capture below shows, Pricing accepts the model that best depicts the likely outcome.
The chart below depicts predicted purchase likelihood ate the various price points requested.
Price optimization is depicted below, where the blue line shows the maximum gross revenue and the green line shows the maximum gross profit.
The table below shows that of the price points specified, $11-12 will render the highest gross revenue. Note that the table also indicates the maximum gross profit would be achieved at a price point of $16.
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