Generative Artificial Intelligence (GenAI) may eventually become the most powerful enabler of competitive advantage for companies that use pricing to leverage profit, or it may not. GenAI in pricing may always have its limits. For all its amazing uses, it is worthwhile to remember that GenAI is not a number cruncher, it is more like a language calculator, and it is only ever going to be one in just a suite of complementary AI tools. However, GenAI in pricing does have an incredible future and its extensive capabilities, but it sometimes runs the risk of being misunderstood, leading to unmet expectations and even unintended consequences. So, looking at what GenAI is, let’s take a trip through the looking-glass and ‘crystal-ball’ together in a journey imagining what the future may potentially hold for GenAI in pricing.

At Pricefx, we have more than a decade’s worth of experience supplying innovative solutions at the forefront of the pricing industry. As the world’s leading enterprise-grade native-cloud pricing software vendor, we take immense pride in the development of emerging technologies to help solve top-line business problems and boost profits and growth for our clients. Pricefx has been at the forefront of pricing AI, continuously investing as the technology grows and evolves. From machine learning and neural networks to agent-based AI and now GenAI, we continue to pursue AI innovation to drive value performance for our customers.

In this article, we will look at exactly what GenAI is and its current uses in our own pricing software solution, before gazing into our crystal ball and examining the future potential use cases for GenAI in pricing.

What Generative AI Does & Why It Is Different to Predictive & Prescriptive AI

Let’s unravel the mystery surrounding GenAI and get to the bottom of what it truly offers. Imagine a versatile tool that seamlessly merges human-like text generation with the power of artificial intelligence.

At its core, GenAI functions as a robust Large Language Model (LLM) meticulously trained on extensive collections of text sourced from the vast realm of the internet. You have likely come across various GenAI tools like ChatGPT, Gemini (formerly Google Bard), Bing AI and more. These tools possess the remarkable ability to understand existing content intricacies and generate entirely new and original material.

Think of GenAI as a trusted writing companion, effortlessly assisting you in crafting diverse content, from engaging articles to articulate chatbot responses, all delivered with remarkable fluency and creativity. You can even train your GenAI to emulate your writing style by providing examples of your writing and desired styles.

However, it is important to note what Generative AI is not – a numerical machine. It does not crunch numbers; instead, it predicts the statistical probability of the next word in a sentence. GenAI LLM models can discern language patterns well enough to respond with striking clarity, but they lack true understanding of the subject matter. When given a word or letter, these models reference their training data to determine the most likely word or set of words to follow.

 

 

In essence, GenAI functions as a ‘language calculator,’ focused on crafting impeccable words rather than crunching numbers.

It’s not a substitute for pricing software but rather an additional component in pricing software’s AI toolkit.

To succeed with GenAI, companies should establish roadmaps and prepare their platforms, data and compose with predictive AIs of price optimization models as the foundation building blocks for GenAI integration.

Now that we have clarified the misconceptions and separated myths from reality surrounding GenAI, it is evident that it is not the magical solution for pricing that many envisioned. However, it still holds potential uses.

With that in mind, let’s delve into how we at Pricefx are currently leveraging GenAI on our platform.

GenAI at Pricefx

In 2024, Pricefx’ steady investment in AI will continue and we will introduce a new set of conversational GenAI capabilities built directly into the Pricefx product and platform. These will debut as an enhancement to our existing Actionable Insights Capability. Deploying a tailored and open source LLM technology, our GenAI Actionable Insights will enable a natural language-based processing and generation to create and serve prescriptive and predictive insights that users can leverage to quickly identify opportunities and risks that have the biggest volume, revenue, and margin impact for the company.

With Pricefx, GenAI LLM capabilities are also now part of our product Knowledge Base, enabling natural language chat-based search and discovery for the entire online training and education website for Pricefx products and services, and in our Product Similarity Accelerator to identify substitute products to upsell and cross sell.

But the technology is moving fast.

Let’s dive in, dream big and imagine what GenAI could possibly bring to pricing platforms soon.

The Future for GenAI in Pricing? What We Dream Could be True

The dawn of GenAI promises a revolution, transforming this data-intensive domain into an accessible playground for all. Imagine a future where natural language interactions, through text or voice, become the key to unlocking the mysteries of pricing strategies. This isn’t just about making life easier for the experts; its about opening the gates wide for non-expert users, allowing them to explore and expand the scope of pricing capabilities without sidelining the tools we have grown to rely on. This democratization of pricing technology aims to reduce our dependence on specialized personnel, fostering a more agile and inclusive ecosystem. The potential goes beyond mere number crunching; GenAI could usher in novel user experiences that not only boos the bottom line but also fortify business resilience against the unpredictable tides of the market.

Let’s gaze into our crystal ball to see what they could look like in the future:

Democratizing Insights and Actions

Painting Data Masterpieces

Imagine being able to conjure intricate charts with nothing but a simple natural language query. This is the magic GenAI could bring to the table. No longer would you need to navigate through complex datasets or wrestle with unwieldy software interfaces.

Instead, you could simply ask, and conversational GenAI would unveil the visual insights hidden within your data, transforming the way we interact with and understand pricing information.

Deciphering the Language of Pricing

Formulating and interpreting complex formulas for pricing metrics could become as easy as asking a question. GenAI could serve as your personal pricing linguist, translating intricate mathematical expressions into understandable insights.

This breakthrough would not only streamline the pricing process but also ensure that strategic decisions are based on solid, comprehensible analytics.

Advanced Alerts and Analytics

Imagine setting up advanced data queries for alerting or analytics as effortlessly as setting an alarm on your phone.

GenAI could enable businesses to easily monitor pricing trends, competitor activities, and market changes, ensuring that they are always one step ahead.

Finding Needles in Data Haystacks

Searching for equivalent deals or customers could become as simple as making a natural language query. GenAI could sift through vast amounts of data to find the needles in the haystack, providing businesses with the insights they need to make informed pricing decisions.

Navigating the Pricing Maze

For newcomers to the pricing domain, GenAI could act as a seasoned guide, offering broad navigation assistance based on past user interactions tailored to a user’s perceived experience and pace.

This personalized guidance could significantly reduce the learning curve, making pricing strategies more accessible to everyone in the organization.

Complementing other AIs

Transforming untapped unstructured data

Unstructured data lies everywhere in pricing and commercial areas, but is generally difficult to exploit, leading to data scarcity or over-reliance on human inputs. GenAI’s ability to process natural language data and compose with other optimization algorithms could be transformative to improve performance and automation.

With GenAI, the moment new data feeds are imported, they could be instantly transformed and integrated into your existing datasets. This seamless assimilation means that pricing strategies can be continuously updated and refined with the latest information, ensuring that your business stays ahead of the curve in a fast-paced market.

Pricing and the Commercial Ecosystem

Bridging Price and Value

Customers and organizations interact with prices and products in ways that require context, rationales, and support. One of the most intriguing potential applications of GenAI is its ability to better reconcile price and value, effectively conveying the attributes of an offer to customers.

This capability could revolutionize how businesses position prices changes and communicate the value of their products and services, ensuring that customers understand exactly what they are paying for.

Configuring Products with Conversations in CPQ

Natural language product configurations in CPQ (Configure, Price, Quote) Software could become a reality with GenAI.

Users could simply describe their requirements, and the system would configure the product accordingly, making the sales process smoother and more intuitive.

Unraveling Behavioral Pricing

GenAI could also explore behavioral factors like promotions and psychological pricing, providing businesses with deeper insights into consumer behavior. This could enable more effective pricing strategies that resonate with customers on a psychological level.

Speeding Up Experiments

Experimentation is the lifeblood of innovation, and with GenAI, businesses could experiment even faster and with fewer technical resources. This agility could lead to breakthrough pricing strategies that could redefine markets.

Super Users and Implementors

Empowering Technical Users

Finally, GenAI could aid technical users by summarizing documentation or existing architectures and parameters, simplifying the creation of APIs (Application Program Interfaces), data schemas, or other technical configurations. This support could free up valuable time and resources, allowing technical teams to focus on strategic initiatives leading to even more flexible and agile pricing platforms.

What About AI in Pricing Right Now?

Clearly then, the future of pricing with Generative AI holds boundless possibilities. From democratizing data access to revolutionizing user experiences, GenAI stands poised to transform the pricing landscape. As we look to the horizon, one thing is clear: the journey into the future of pricing is not just about embracing new technology; it is about unlocking new potential for businesses and individuals alike.

But before we get there, let’s look at what the other side of the AI fence (predictive and prescriptive AI) is already doing for your pricing.

To learn more about AI in pricing and some cool things that you can use it for (right now – today!), check out this handy article below:

Or if you would like to dive deeper into what GenAI is and what really makes it tick, please check out my eBook by clicking on the image below:

Meanwhile, Happy Pricing!