The needs of the consumer can only be converted into demand if the consumer has the willingness and capacity to buy the product. That is why pricing is the most important concept in the field of marketing and the most important element of the marketing mix.
Of the four P’s, price is the only element that is directly linked to revenue, while the other three aspects: product, promotion and place, are not.
Traditionally, setting pricing was a manual process, in which factors like cost price, expected sales, promotions were taken into account.
Nowadays, pricing becomes an automated process. Based on realized sales, customer behavior, forecasting models and optimization algorithms, software can determine and distribute optimal prices.
Price management includes all the activities around the P of price, including determining the overall price strategy of the company and the price structure of the assortment, as well as managing day-to-day price changes of individual products.