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