How Pricing Functions Work
Pricing Functions are built around three main layers.
1. Intelligence Layer (AI & Data)
The Intelligence Layer contains AI-driven signals and data inputs used by Pricing Functions.
Examples include:
demand forecasts
price elasticity
seasonality data
competitor pricing
clustering
sales signals
inventory data
These signals act as the foundation for pricing decisions and automations.
2. Composition Layer (Pricing Functions)
The Composition Layer is where business users define their pricing logic and business rules.
Pricing Functions can include:
product classifications
pricing thresholds
inventory target rules
alerts and notifications
market positioning logic
campaign logic
custom calculations
Functions can also reference other Pricing Functions, allowing pricing logic to remain modular, reusable, and easy to maintain.
This enables businesses to build scalable pricing frameworks without duplicating logic across multiple workflows.
3. Execution Layer (Modules)
Once conditions are met, Pricen modules can automatically execute actions based on Pricing Functions.
Examples include:
triggering markdown automation
switching pricing strategies
activating campaigns
updating assortments
creating alerts
adjusting pricing recommendations
All updates can happen automatically in real time without manual intervention.
Example Use Cases
Product Classification
Products can be automatically categorized into different strategic groups such as:
Star
Volume
Niche Premium
Laggard
Classifications can be based on:
sales volume
profitability
demand
inventory turnover
pricing competitiveness
When a product classification changes, other pricing strategies and workflows can update automatically.
Markdown Automation
If demand decreases or inventory exceeds target levels:
Pricing Functions identify the situation
Markdown strategy is triggered
Prices are adjusted automatically
Inventory is optimized and reduced gradually
This reduces manual work and improves reaction speed.
Market Positioning
Pricing Functions can automatically classify products based on market position, such as:
Below Market
Below Median
Above Median
Above Market
This information can then be used in:
dashboards
filters
pricing strategies
automated pricing decisions
reporting
Using External Data Sources
Pricing Functions can also utilize external data sources, including:
weather data
Google Analytics data
ERP data
campaign performance data
inventory systems
Example:
cold weather forecast increases winter product demand
Pricing Functions detect the signal
pricing strategies update automatically
Read from here a lot more about this with great examples:
https://www.pricen.ai/software-solutions/pricing-functions/