Product Pricing Model (e-commerce)

Description
This model uses Excel Solver to allow the tool find the best price for a new product to maximise the revenue within the first 18 months of the product release.

The optimum price is based on recommended figures from the client as well as on the assumptions gathered from the company website, industry statistics and publicly available resources (EU commission).

The model produces a detailed statement of comprehensive income (profit and loss) for two categories of products:

- The basic version of the product
- The premium (deluxe) edition

The purpose of the model is to find the profit-maximising price for the premium product line within the first 18 months of the product launch date.

The model takes into account seasonality of product sales in the industry (obtained from the manufacturer's website) and industry-specific marketing expenses such as price protection expense to retailers. Fulfilment and general administrative expenses have been excluded however they are ready to be added in the model if required.

Note that using Excel Solver allows model user to find the optimal value (here selling price) within the specific constraints. Here, the constraint was the selling price of the basic product version (for $59.99) and the ratio of premium / basic product category price which should be maintained at all times (please go to Data -> Solver in this workbook to check the assumptions used to find the profit-maximising price).