How to Calculate the Selling Price of a Product in the Age of Artificial Intelligence
Determining the most appropriate selling price for a product is one of the most critical decisions in any business. The selling price not only determines revenue per unit sold, but also influences product perception,market competitiveness, and overall business profitability. A price that is too high can scare away customers, while one that is too low can compromise profit margins.
Today's environment demands dynamic decisions, AI-based strategies, and tools capable of adapting in real time to what is happening in your industry.That's why leading retailers, e-commerce companies, and manufacturers are using platforms like Optimus Price, an AI-based pricing solution trained to monitor prices and set them dynamically. Forget endless spreadsheets, generic margin calculations, and static prices. To define a product's selling price, you need more than basic formulas; you need context, data,and speed.
In this post, we'll explore how to calculate a product's selling price,the key factors to consider, common mistakes to avoid, and how tools like Optimus Price's Competitor Price Monitoring can facilitate this process.
What does it mean to calculate a product's selling price today?
Nowadays, this issue is much more complex than before. It's no longer just about adding up costs and applying a margin; it involves taking into account aspects such as:
• Cost and demand volatility
• Constant changes in competitor prices
• Dynamic consumer elasticity
• Stock turnover and margin targets by category
• Real-time market intelligence
The real key is automating processes and maximizing their optimization.
How is a product's selling price calculated by using the traditional way?
Although formulas are still useful as a starting point, they are far from sufficient. The classic margin formula is this:
Selling Price = Total Cost / (1 - Desired Margin)
For example, if a product costs €40 and you want a 25%margin, the selling price would be calculated as follows:
40€ / (1 – 0,25) = 53,33€
But this formula doesn't answer questions like:
• Is it aligned with what the market pays?
• Am I optimizing my margins without losing volume?
• What happens if my competitor changes their price tomorrow?
This is where dynamic AI models make a difference.
Why is the traditional method for calculating selling price no longer sufficient?
The traditional formula doesn't answer questions like:
• Is this price aligned with what the market pays?
• Am I optimizing my margins without losing volume?
• What happens if my competitor changes their price tomorrow and I don't notice?
Pricing today is:
• Multivariate: stock, demand, competition, elasticity…
• Multichannel: ecommerce, marketplaces, physical retail,distributors…
• Real-time: a price change can affect your sales in minutes.
Therefore, calculating a product's selling price manually is not very scalable and causes you to miss out on opportunities. This is where dynamic pricing models with AI like Optimus Price make the difference.
How leading companies today calculate the selling price of their products
Today, leading companies calculate the price of their products with artificial intelligence, allowing them to adjust them based on predefined rules (minimum margin, excess stock, aggressive competition, peak season, etc.) and update them as often as necessary. The steps to follow are:
1. Import your catalog and costs
From your ERP or ecommerce, integrate your information with OptimusPrice.
2. Define your margin and positioning strategy
Establish minimum margins and acceptable elasticity levels by category or product.
3. Activate the competitor price tracker
Visualize the market price map (leaders, aggressive, passive) and obtain updated information at all times automatically.
4. Simulate and optimize
Run simulations before launching promotions or price changes.
5. Activate Dynamic Pricing
Let AI automatically update prices based on intelligent rules: you can maintain strategic control and free yourself from operational work, saving time to focus on tasks that add real value, while also reducing errors that manual processes can cause.
Mistakes You Can't Afford Today
- ❌ Setting the same price across all channels
- ❌ Using only fixed margins
- ❌ Not reviewing prices at least weekly
- ❌ Focusing only on the most visible competitors
- ❌ Not considering customer behavior
Calculating a product's selling price without technology is like marketing without data—possible, but inefficient.
Real Cases: How companies in different sectors optimize their prices with AI
The implementation of artificial intelligence in pricing strategies is no longer a promise of the future, but a tangible reality that is transforming business profitability across multiple sectors. From e-commerce to omnichannel manufacturers and retailers, more and more companies are using Optimus Price to make faster, more accurate, and more profitable decisions. These three cases illustrate how applying this technology has a direct impact on margins, competitiveness, and sales channel control.
Electronics e-commerce:
An online store specializing in technology products has integrated Optimus Price to automate pricing for more than 2,500 items. Previously, prices were updated manually once a week, resulting in mismatches with competitors and unstable margins. Thanks to Dynamic Pricing algorithms and a competitor price monitoring, they were able to adjust prices daily, always maintaining the optimal margin. In less than three months, their average margin grew by 12% without negatively impacting the conversion rate or sales volume.
Manufacturer with a distributor network:
An industrial products manufacturer that sells through more than 100 distributors has implemented Optimus Price to monitor compliance with the minimum recommended price (MAP). Previously, they lacked real-time visibility into which distributors were lowering prices below the minimum. With automatic alerts, the pricing team was able to detect deviations, respond quickly, and strengthen commercial conditions. This has improved brand consistency, avoided internal price wars, and increased trust in the distribution network.
If you want to know more, we recommend you read Control your distribution channels! Key strategies for manufacturers
Conclusion: Stop calculating and start optimizing
Knowing how to calculate a product's selling price is still important,but knowing the formula is no longer enough. The real value lies in knowing how to adapt that price in real time to what's happening in your market, in your inventory, and in the consumer's mind.
Optimus Price not only helps you set a good price today, but also helps you always maintain the best possible price for each product, channel, and moment. With AI, automation, and price intelligence, you can make strategic pricing decisions without having to be an expert in everything.
Are you ready to turn pricing into your competitive advantage?
👉 Request a demo and we'll show you how, no obligation.
