Why do we need a Price Index?

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The price index is not just a number. It is a tool for making management decisions. Here are the main benefits of using it:

Analysis of competitors' pricing strategies.
You can understand which competitors adhere to which pricing strategies, and not just at the level of the entire catalog, but at the level of individual product groups.
Market position control.

Regular monitoring will help maintain an optimal price level to increase sales and turnover.
Basis for dynamic pricing.
With the IC, you can flexibly adjust prices depending on the situation by connecting dynamic pricing : increase or decrease the cost of individual goods, groups or the entire range.
Understanding consumer behavior.
Analyzing the dynamics of the IC and sales provides insights into purchasing habits and trends.
The main difficulties when working with the Price Index

In practice, the process of calculating the Price Index is labor-intensive, requires well-established processes and work skills. There are several labor-intensive processes in working with the metric. To work with the index, you need relevant and fresh data on competitors' prices. They must be regularly collected from competitors' websites, marketplaces, aggregators and other sources. And what is important is that the data must undergo multiple quality checks to avoid errors and distortions in calculations. However, in practice, not all companies do this. As a result, businesses rely on outdated or incomplete information, which reduces the effectiveness of the analysis to a minimum.

Once the issue of quality data is resolved, new challenges arise:
processing large amounts of information,
its unification into a single structure,
correct calculation of the IC,
analysis of the obtained results,
and, finally, timely decision-making on revaluation of goods.
At each stage, errors related to the human factor may occur: incorrect comparison of goods, duplication of data, incorrect calculation, missed price updates and other technical failures.

These problems can be solved using automation - by implementing a specialized solution for pricing optimization. For example, the iDatica service automates all the processes described above. To work with the Price Index, there is a specialized dashboard that allows you to form and analyze the product group you are interested in in a few clicks.