Imminent Changes in the Pricing Profession

If you were asked to pick a single word to describe the world over the past few years, what would it be? I can’t think of a better word than “disruptive!”

The chain of events began with the 2020 pandemic, prompting lockdowns that paralyzed the economy. Job losses led to government stimulus packages, causing inflation due to excess money in circulation. To counter this, the government raised interest, but this inadvertently slowed economic recovery. Meanwhile, as the geopolitical conflict between the free and authoritarian governments escalates, the ongoing US-China trade war further intensifies. Russia’s initiation of the war in Ukraine triggered drastic sanctions, which prompted Russian retaliation by weaponizing energy and food exports, leading to widespread shortages. These global events fractured the supply chain, leading to constricted supply and elevated shipping costs, which are often passed to the buyers. In response to the risk of geopolitics and supply chain failures, restructuring is underway. All these economic uncertainties are making the job of pricing professionals ever more challenging.

Yet the disruption to pricing doesn’t end there. It is further compounded by the innovation of disruptive technologies, such as real-time dynamic pricing, AI Profit Optimization, and ChatGPT. This not only changes the nature of pricing analysts’ work, but also how they conduct their work. So the pricing profession is changing rapidly, and it’s driven by both the macroeconomic environment and innovation in AI. Since the Professional Pricing Society (PPS) has the important mission of nurturing a growing community of pricing professionals, these disruptions in pricing are addressed center stage in not one, but two talks at the upcoming PPS events. And I am privileged to be speaking at both.

PPS Amsterdam – Dec 1st

In an era defined by unprecedented market volatility, businesses are grappling with changes in demand, supply chains, and consumer behavior. Coupled with the rising interest rates, many leaders are also shifting their business strategies to focus more on profitability. Although leveraging pricing to drive profitability is not new to the pricing profession, the nuance of profit optimization amidst market turbulence is not easy even with the help of advanced analytical tools.

However, by seamlessly integrating 3 AI innovations, businesses can navigate uncertain terrain with calculated precision. This is the reason why I am so excited about the following talk where I will be speaking about a triad of AI-related technologies that, when harmonized, will pave the way for the AI profit revolution.

The AI Profit Revolution: From Turbulence to Triumph

Abstract: With the tumultuous macroeconomic conditions and the turbulent business landscape, achieving profitability has become paramount for companies of all sizes. While the profit equation is simple: Profit = Revenue – Cost, its maximization in today’s volatile environment is very challenging.

Fortunately, AI is here, and AI can help! Although the 4th industrial revolution is well underway with the recent advancement of generative AI (e.g. ChatGPT), successful AI profit optimization requires the harmony of 3 different AI-related technologies. This session will introduce these innovations and highlight their relevance to pricing and profitability. Then we will demonstrate how the seamless integration of these 3 ingredients is the key to triumph in profit optimization. Join us in unraveling profit optimization in the age of AI and discover the pathways to AI-fueled profitability amidst uncertainties.

We will begin by identifying the key difference between profit optimization in periods of stability versus chaos. When the economy is highly volatile, the cost component of the profit equation cannot be treated as a constant and its accurate estimation becomes crucial for effective profit maximization. We will demonstrate the profit impact of a more accurate cost estimation approach that is based on opportunity cost.

Although the revenue component of the profit equation can be effectively optimized by pricing, the conventional segmentation approach has serious limitations in this age of big data. We will present a novel neural-network-based approach to directly predict a customer’s willingness-to-pay prices and optimize it under the win-rate model specified by data. This approach furnished pricers the new capability of practically accommodating any number of predictors to more accurately capture the current market conditions, however chaotic they may be. We will also demonstrate the superior prediction accuracy of the neural network while highlighting its impact on profit.

The ability to capture the dynamic volatility in both cost and revenue will enable pricing analysts to transform turbulence into triumph.

PPS Atlanta – Oct 13th

One of the most disruptive technologies of the 21st century is AI, as it will catalyze our transition into the 4th industrial revolution. And one of the most groundbreaking advancements in AI is generative AI (GenAI), as exemplified by the sweeping global adoption of ChatGPT.

Although GenAI is poised to disrupt pricing, it’s so new that not many pricing professionals know the possibilities and boundaries of this invention, let alone the details of its inner workings. Yet, I am a strong believer that the best way to grasp the potential and limitations of a technology is to truly understand how it works. That is why I’ll be giving an in-depth and comprehensive keynote on GenAI beyond just how to create prompts for ChatGPT.

Beyond ChatGPT: Inside the Minds of Generative AI

Abstract: As the popularity of ChatGPT grows, it has brought the potential of generative AI to the forefront of public attention. But what is generative AI, how does it work, and why does it hallucinate? Despite its ability to generate everything from coherent dialogues, perfectly rhymed poems, award winning arts, and melodic musical tunes, is it truly intelligent? More importantly, how can businesses leverage this technology to drive innovation and growth?

This keynote will address all these questions. Moreover, we will explore some of the good, the bad, and the ugly use cases of ChatGPT-liked technologies and understand why. This will empower you to leverage the vast potential of generative AI tools productively to create the greatest value. Whether you are an AI enthusiast or a business leader looking to stay ahead of the curve, this presentation promises to provide valuable insights into one of the most exciting developments in the world of AI today. Last, but not least, we will also discuss some of the implications for pricing professionals in this age of AI.

We will start with language models and go through the training and making of ChatGPT while addressing everyone’s concerns about hallucinations. Attendees will gain a deep understanding of not just how GenAI works, but also why it works so well in certain domains. An important use case that will significantly impact pricing analysts is GenAI’s capability to write codes and perform analysis, and we will explore its legality and other risk factors. The session will empower pricing professionals with the knowledge needed to harness GenAI’s power productively and safely.

As the talks unfold, a clear theme emerges: the pricing analyst’s role is rapidly evolving. Today’s pricing professionals are becoming strategic navigators, relying on AI’s analytical capabilities to adapt pricing strategies dynamically. This keynote will equip you with the knowledge to evolve alongside this transformation and elevate your role.

Conclusion

As the pricing landscape undergoes seismic changes driven by AI technology, pricing professionals have the unique opportunity to shape their future. With GenAI and advanced AI profit optimization, pricing professionals can now be more proactive rather than reactive to the market. And they will play a critical and strategic role under the current profit imperative.

So, whether you are based in the US or Europe, I invite you to join me at PPS, and we will prepare you to thrive under these changes. Don’t miss the chance to take control of your own future!