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<title>Algorithmic pricing</title>
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<span id="openzim-page-title" class="mw-page-title-main"><span class="mw-page-title-main">Algorithmic pricing</span></span>
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<div id="mw-content-text" class="mw-body-content mw-content-ltr" lang="en" dir="ltr"><div class="mw-content-ltr mw-parser-output" lang="en" dir="ltr"><p><b>Algorithmic pricing</b> is the practice of automatically setting the requested price for items for sale, in order to maximize the seller's profits.
</p><p>Dynamic pricing algorithms usually rely on one or more of the following data.
</p>
<ul><li>Probabilistic and statistical information<sup id="cite_ref-1" class="reference"><a href="#cite_note-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup> on potential buyers; see <a href="Bayesian-optimal_pricing" title="Bayesian-optimal pricing">Bayesian-optimal pricing</a>.</li>
<li>Prices of competitors. E.g., a seller of an item may automatically detect the lowest price currently offered for that item, and suggest a price within $1 of that price.<sup id="cite_ref-chen16_2-0" class="reference"><a href="#cite_note-chen16-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-vanni16_3-0" class="reference"><a href="#cite_note-vanni16-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup></li>
<li>Personal information of the currently active buyer, such as her or his demographics and her or his interest in the product. If the seller detects that you are about to buy, your price goes up.<sup id="cite_ref-quora13_4-0" class="reference"><a href="#cite_note-quora13-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup></li>
<li>Business information of the seller, such as the expected date in which he or she is going to receive new stocks, or her or his target selling velocity in units per day.<sup id="cite_ref-karr16_5-0" class="reference"><a href="#cite_note-karr16-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup></li></ul>
<div class="mw-heading mw-heading2"><h2 id="See_also">See also</h2></div>
<ul><li><a href="Algorithmic_trading" title="Algorithmic trading">Algorithmic trading</a></li>
<li><a href="Contribution_margin" title="Contribution margin">Contribution margin</a></li>
<li><a href="Price_optimization_software" class="mw-redirect" title="Price optimization software">Price optimization software</a></li>
<li><a href="Pricing" title="Pricing">Pricing</a></li>
<li><a href="Tacit_collusion" title="Tacit collusion">Tacit collusion</a></li>
<li><a href="Yield_management" title="Yield management">Yield management</a></li></ul>
<div class="mw-heading mw-heading2"><h2 id="References">References</h2></div>
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<li id="cite_note-1"><span class="mw-cite-backlink"><b><a href="#cite_ref-1">^</a></b></span> <span class="reference-text"><style data-mw-deduplicate="TemplateStyles:r1238218222">
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</style><cite id="CITEREFCohenSpittleRoyer2024" class="citation web cs1">Cohen, Maxime; Spittle, Tim; Royer, Jimmy (September 16, 2024). <a rel="nofollow" class="external text" href="https://www.analysisgroup.com/globalassets/insights/publishing/2024_assessing_algorithmic_versus_generative_ai_pricing_tools.pdf">"Assessing Algorithmic Versus Generative AI Pricing Tools"</a> <span class="cs1-format">(PDF)</span><span class="reference-accessdate">. Retrieved <span class="nowrap">April 8,</span> 2025</span>.</cite></span>
</li>
<li id="cite_note-chen16-2"><span class="mw-cite-backlink"><b><a href="#cite_ref-chen16_2-0">^</a></b></span> <span class="reference-text"><cite id="CITEREFChenMisloveWilson2016" class="citation book cs1">Chen, Le; Mislove, Alan; Wilson, Christo (2016). <a rel="nofollow" class="external text" href="http://dl.acm.org/citation.cfm?id=2883089">"An Empirical Analysis of Algorithmic Pricing on Amazon Marketplace"</a>. <i>Proceedings of the 25th International Conference on World Wide Web</i>. pp. <span class="nowrap">1339–</span>1349. <a href="Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.1145%2F2872427.2883089">10.1145/2872427.2883089</a>. <a href="ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <bdi>9781450341431</bdi>. <a href="S2CID_(identifier)" class="mw-redirect" title="S2CID (identifier)">S2CID</a> <a rel="nofollow" class="external text" href="https://api.semanticscholar.org/CorpusID:9570936">9570936</a>.</cite></span>
</li>
<li id="cite_note-vanni16-3"><span class="mw-cite-backlink"><b><a href="#cite_ref-vanni16_3-0">^</a></b></span> <span class="reference-text"><cite id="CITEREFVanni2016" class="citation web cs1">Vanni, Olivia (2016-04-12). <a rel="nofollow" class="external text" href="https://web.archive.org/web/20160413203827/http://bostinno.streetwise.co/2016/04/12/amazon-marketplace-pricing-structure-advice-for-sellers/">"The Truth Behind Pricing Algorithms on Amazon's Marketplace"</a>. <i>BostInno</i>. Archived from <a rel="nofollow" class="external text" href="http://bostinno.streetwise.co/2016/04/12/amazon-marketplace-pricing-structure-advice-for-sellers/">the original</a> on 2016-04-13<span class="reference-accessdate">. Retrieved <span class="nowrap">29 June</span> 2016</span>.</cite></span>
</li>
<li id="cite_note-quora13-4"><span class="mw-cite-backlink"><b><a href="#cite_ref-quora13_4-0">^</a></b></span> <span class="reference-text"><cite id="CITEREFRobert_Wagner2013" class="citation web cs1">Robert Wagner (2013). <a rel="nofollow" class="external text" href="https://www.quora.com/What-are-the-principles-behind-Amazons-algorithmic-pricing-and-what-do-they-achieve">"What are the principles behind Amazon's algorithmic pricing and what do they achieve?"</a><span class="reference-accessdate">. Retrieved <span class="nowrap">29 June</span> 2016</span>.</cite></span>
</li>
<li id="cite_note-karr16-5"><span class="mw-cite-backlink"><b><a href="#cite_ref-karr16_5-0">^</a></b></span> <span class="reference-text"><cite id="CITEREFDouglas_Karr" class="citation web cs1">Douglas Karr. <a rel="nofollow" class="external text" href="https://web.archive.org/web/20160601103905/https://www.marketingtechblog.com/algorithmic-pricing-maximize-profits/">"How to Use Algorithmic Pricing to Maximize Profits"</a>. Archived from <a rel="nofollow" class="external text" href="https://www.marketingtechblog.com/algorithmic-pricing-maximize-profits/">the original</a> on 1 June 2016<span class="reference-accessdate">. Retrieved <span class="nowrap">29 June</span> 2016</span>.</cite></span>
</li>
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