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Evaluating the Efficacy of Pricing Optimisation Strategies through Agent-Based Modelling

In: The Palgrave Handbook of Breakthrough Technologies in Contemporary Organisations

Author

Listed:
  • Hasan Beyari

    (Applied College, Umm Al-Qura University)

Abstract

An organisation in a duopoly might gain an edge by poaching its rival's price-sensitive clients, resulting in better profits and more sales income. To test this hypothesis, researchers used agent-based modelling to simulate a market for electric vehicles with two competing producers. The first stage was to establish a reference point. We ran a thousand-fold simulation and an agent-based model under the assumption that company 1 lowered its price by no more than 20%, causing no more than 40% of company 2's price-sensitive clients to migrate over. The results of a comprehensive analysis involving several simulations and agent-based modelling indicate that a decrease in prices by first company resulted in a significant gain in customer acquisition. This rise in customers may be attributed to a probable shift from the second company. Furthermore, this price drop led to greater revenues from both sales channels. The first company won the market share of the second company's consumers thanks to its aggressive pricing approach in the automobile industry. This research has implications for businesses that are trying to win over price-conscious clients who may otherwise go elsewhere.

Suggested Citation

  • Hasan Beyari, 2025. "Evaluating the Efficacy of Pricing Optimisation Strategies through Agent-Based Modelling," Springer Books, in: Mahmoud Moussa & Adela McMurray (ed.), The Palgrave Handbook of Breakthrough Technologies in Contemporary Organisations, chapter 0, pages 329-340, Springer.
    • Handle: RePEc:spr:sprchp:978-981-96-2516-1_26
    DOI: 10.1007/978-981-96-2516-1_26
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