The Pricing Engine settings form the basis of Omnia’s algorithm price elasticity calculations.
You can find the Dynamic Pricing Engine Settings by navigating to the Pricing Strategy page. Above the Business Rules, you will find the tile. By clicking it, the bar expands, showing you the settings menu.
The settings consist of four different components:
- Shipping costs
- Elasticity calculation
Here you can define whether you want to take the shipping costs of competitors into account as a standard setting.
You’ll see the text Price based on prices [including / excluding] shipping costs. Simply select whether you’d like to include or exclude these costs by default.
For online-only retailers, we recommend including shipping costs. Omnichannel retailers may choose to exclude shipping costs.
Note - To include shipping costs, Omnia needs to have data on competitor shipping cost available. This is dependent on your selected data source.
In competition, you tell the algorithm how to handle competitors. You need to make three decisions about your competition:
Only use competitors with defined weight
Yes Only competitors defined in competitor settings are used
No All competitors in the market are used
Number of competitors for average price calculation
Here you can select how many competitors Omnia includes in the average price calculation.
Prioritize competitors on
Lowest price - Omnia will rank the competitors in the market from lowest to highest price and take the average of their price.
Highest price - Omnia will rank the competitors in the market from highest weight to lowest.
Default price elasticity: 1% of price decrease leads to [xx] % volume increase
Omnia is able to calculate your product/category elasticities after gathering sufficient data. This is normally after approx. 6 months of running.
Before this is calculated, Omnia applies a default elasticity percentage of 5%. You can adjust this to your liking.
The reinvestment percentage is the percentage of margin you would like to reinvest in offering a lower price, thereby achieving higher sales volume.
The default reinvestment is 15%. By adjusting the slider, you can change the reinvestment percentage. Moving the slider to the left focuses on maximizing profit, whereas moving the slider to the right focuses on maximized sales.
Extra adjustment for competitors within [xx] % of calculated optimal price
With this setting, Omnia will revert the price towards a competitor price point, if this price is within xx% range of Omnia’s original price suggestion.
Here you can select the minimum margin you want the algorithm to take into account.
Note: that this only goes for the algorithmic price advice. As the business rules follow after the algorithmic price advice, additional minimum margin rules need to be added here as well!