DYNAMIC PRICING

dynamic-pricing

BUSINESS PROBLEM:


  • A game company gave its users gift money to purchase items in a game. Users buy various vehicles for their characters using these virtual coins. The game company did not specify a price for an item and allowed users to get whatever prices they wanted for that item. For example, for the item named shield, users will purchase this shield by paying the amounts they see fit. In other words, one user can pay with 30 virtual currencies and the other user with 45 virtual currencies. Therefore, users can purchase this product with the amounts they are willing to pay for themselves.

VARIABLES


  • Category_id – Item Categories

  • 489756

  • 874521

  • 361254

  • 326584

  • 675201

  • 201436

  • Price – Sales Amount

SIMULATION

  • I simulated income for different prices. Price ranges were obtained with a 95% confidence interval. The simulation technique was the Monte Carlo simulation. As a result, we learned that the best price for all categories is $34.99. E.g; The price of $34.99 was chosen because fractional prices are suitable for real-life scenarios. Customers often psychologically perceive partial prices, such as $34.99, to be cheaper than full-priced products. I wanted to apply this reverse psychology in the simulation here and decided that this was the most likely price.

dynamic.mp4


GitHub

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