How can recent advances in generative AI (GenAI) tools be used to transform pricing decisions?
By lowering technical and financial barriers, these tools democratize access to sophisticated pricing capabilities, empowering even small businesses to benefit from AI without the need for costly, bespoke solutions.
In the article “How to Use Generative AI for Pricing,” written by CRA Senior Consultant Maxime Cohen, drawing from his forthcoming book on pricing in the age of AI, he explores the promising trend of leveraging large language models (LLMs) to support pricing decisions.
In the article, pricing refers to simple, static recommendations of price points for products or services. Prompting an LLM to recommend a price requires no technical skill and can be done for any type of product or service at a very low cost.
GenAI-driven approaches (also known as LLM-based pricing) have fundamental differences from traditional algorithmic pricing that should inform their use. Effective pricing recommendations depend heavily on how prompts are crafted.
Cohen concludes that LLMs represent a promising and easily accessible solution for pricing, with their influence on market prices primarily shaped by how users craft prompts. He emphasizes that these tools can effectively complement traditional algorithmic pricing methods, enhancing decision-making through human-guided input.
