Pricestack estimates profit uplift by forecasting the demand for a given product at the optimal price point. For example, if Pricestack is suggesting that you change the price of a product from $25 to $20, our AI will also forecast quantity demanded at the old and new price points over the next 365 days.
Once we know the price that the product will be changed to and the quantity demanded over the next year, we calculate how much extra profit you'll earn.
For example if our example product was originally priced at $25 with a 50% profit margin, and the quantity demanded was 100 units, your profit is estimated to be $25 x 50% x 100 units = $1,250. At the new price of $20 with a 50% profit margin and a new quantity demanded of 150 units, your profit is estimated to be $20 x 50% x 150 units = $1,500.
Pricestack calculates profit uplift as the difference between the profit estimate at the new, optimal price and the profit estimate at the old price. In our example this would be: $1,500 - $1,250 = $250. Percent uplift wold be ($1,500 - $1,250) / $1,250 = +20%.
Pricestack attributes profit uplift to our price, discount, and promo code optimization by viewing revenue and profit figures on a per visitor basis. To read our help article on understanding revenue and profit per visitor metrics, click here.
Attribution becomes much easier when viewing per visitor metrics because it factors out two things: seasonality in visitor counts and growth. The goal of Pricestack's pricing AI is to optimize and maximize the profitability derived from each individual site visitor. This means that Pricestack does not take credit for increases in visitor count growth that leads to higher sales. What we do take credit for is seeing more profit and revenue per extra visitor, making that extra traffic more profitable than it would have been with your old, suboptimal pricing strategy.