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# Summary
The Pricing Analytics solution uses your transactional history data to show you how the demand
for your products responds to the prices you offer, to recommend pricing changes, and allow
you to simulate how changes in price would affect your demand, at a fine granularity.
This solution on Pricing Analytics uses your sales history transactional data to show you how the demand
for your products responds to the prices you offer. This way you can recommend pricing changes, and
simulate how changes in price would affect your demand, at the level of individual products.
It estimates price elasticities for every product, site, channel and customer segment
in your business. The models avoid most common confounding effects using an advanced modeling
The core of the solution is the ability to
estimate price elasticities for every product, site, channel and customer segment
in your business. These elasticity models avoid most common confounding effects by using an advanced modeling
approach combining the strengths of machine learning and econometrics.
The solution has both visualization components (in Power BI) and interactive simulation components (in Excel).
The solution has visualization components both in Power BI and for interactive simulation, in Excel.
# Description
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Additionally, estimating demand for item, sites, and channels with sparse demand is a challenge
and pricing solutions often only give estimates at product category level. Our pricing solution
uses "hierarchical regularization" to produce consistent estimates in such data-poor situations.
Simply put, in absence of evidence, the model borrows information from other items in the same category,
same items in other sites, and so on. As data in an item increases, its elasticity estimate will be
uses "hierarchical regularization" to produce consistent estimates down to the product level in such data-poor situations.
Simply put, in absence of strong evidence, the model borrows information from other items in the same category,
same items in other sites, and so on. As data for an item increases, its elasticity estimate will be
fine-tuned more specifically.
This solution analyzes your prices and
* shows you in one glance how elastic your product demand is
* provides pricing recommendations for every product in your item catalog
* discovers related products (substitutes and complements
* shows you in one glance how elastic your product demand is,
* provides pricing recommendations for every product in your item catalog,
* discovers related products (substitutes and complements),
* lets you simulate promotional scenarios.
All information is provided the fine level at which you need to control your price and inventory.
All information is provided at the level at which you need for detailed control of your price and inventory.
Additional detail on the data science of prices are in our
[blog post](https://blogs.msdn.microsoft.com/intel/archives/1015).
# Solution Architecture
The solution uses a SQL server to store your transactional data and the generated model predictions.
There are more than 10 elasticity modeling core services, which are authored in AzureML using Python core libraries.
Azure Data Factory schedules weekly model refreshes. The results display in a PowerBI dashboard.
The provided Excel spreadsheet consumes the predictive Web Services.
Azure Solutions are composed of cloud-based analytics tools for data ingestion, data storage, scheduling and advanced analytics components in a way that can be integrated with your current production systems. This Solution combines these Azure services:
* A SQL server to store your transactional data and the generated model predictions.
* Azure Data Factory, which schedules weekly model refreshes.
* There are more than 10 elasticity modeling core services, which are exposed by AzureML.
* The provided Excel spreadsheets run the predictive Web Services.
* The results display in a PowerBI dashboard.
![Solution Architecture](images/pcsArchitectureDiagram.png)