AI Pricing Optimisation: What's Realistic for Your Business

When people talk about “AI pricing,” they usually mean the kind of dynamic pricing that airlines and hotels use — thousands of price changes per day, driven by algorithms that factor in demand, inventory, seasonality, and competitor behaviour. That technology exists. It works. And for most small and mid-sized businesses, it’s completely irrelevant.

But that doesn’t mean AI pricing is off the table for your business. It just means the useful version looks different from the enterprise version. Let me break down what actually matters.

The Enterprise Pricing Problem (And Why It’s Not Yours)

Companies like Amazon adjust millions of prices daily. Airline revenue management systems recalculate seat prices every few minutes. These systems cost millions to build and require dedicated data science teams to maintain.

If you’re running a wholesale distribution business, a trades company, a retail operation, or a professional services firm — that’s not your problem. Your pricing challenges are more like:

• “Am I charging enough to cover my actual costs, including the ones I keep forgetting?”
• “What are my competitors charging, and am I wildly out of line?”
• “Which products or services have the best margins, and which ones am I practically giving away?”
• “When should I increase prices, and by how much?”

These are solvable problems. And AI can help with every one of them — without a million-dollar budget.

Where AI Pricing Actually Helps SMBs

Cost-Based Pricing Intelligence

Most businesses know their direct costs. You know what you pay for materials or stock. What’s harder to track is the fully loaded cost — labour, overhead, wastage, delivery, returns, admin time. A lot of businesses price based on the direct cost plus a markup, without realising their true margin is half what they think.

AI can pull data from your accounting system, your purchase orders, your timesheets, and your job records to calculate the real cost of delivering each product or service. Not a rough estimate — an actual, data-backed cost that accounts for everything.

Once you know the real cost, pricing decisions become dramatically clearer. You might discover that your most popular service has a 12% margin while a service you barely promote has a 45% margin. That changes your strategy overnight.

Competitor Price Monitoring

Manually checking competitor pricing is tedious and inconsistent. You do it when you remember, you check the competitors you know about, and you miss changes between checks.

AI can automate this. For businesses with publicly listed prices (retail, e-commerce, some services), AI tools can monitor competitor websites and alert you to price changes. For businesses with quote-based pricing (trades, professional services, B2B), AI can analyse your win/loss data against quoted prices to identify where you’re pricing yourself out of work — or leaving money on the table.

The output isn’t “change your price to $X.” It’s intelligence: “You’ve lost 7 of the last 10 quotes over $50,000. Your win rate on quotes under $30,000 is 65%. There may be a threshold where your pricing becomes uncompetitive.”

Demand-Based Adjustments

This is where AI pricing gets closer to the enterprise model, but in a form that makes sense for smaller businesses. If you sell products or services where demand fluctuates — seasonal work, event-driven demand, capacity-constrained services — AI can identify patterns and suggest pricing adjustments.

A landscaping business might see that demand for retaining wall work spikes in autumn when people prepare for winter rains. AI can flag this pattern and suggest a modest price increase during peak demand, or promotional pricing during the quiet months to smooth out the workload.

This isn’t about gouging customers. It’s about aligning your pricing with the market reality that already exists. You’re probably already doing a version of this intuitively — charging more for urgent work, discounting to fill quiet periods. AI just makes it systematic.

What’s Not Worth Doing (Yet)

Let me be honest about where AI pricing doesn’t make sense for most SMBs.

Real-time dynamic pricing — changing prices by the hour based on demand signals — requires high transaction volumes and price-insensitive customers. Unless you’re running a large e-commerce operation or a marketplace, the complexity isn’t worth it.

Fully automated price changes — letting AI change your prices without human review — is risky for businesses where customer relationships matter. Your long-standing customers won’t appreciate discovering they’re paying 20% more than last month because an algorithm decided demand was high. Use AI for recommendations, not autonomous changes.

Predictive competitor pricing — trying to predict what competitors will charge in the future — requires data you probably don’t have and accuracy levels that current AI can’t reliably deliver at the SMB scale.

A Practical Starting Point

If you want to use AI to improve your pricing, here’s where I’d start:

1. Get your cost data clean. AI pricing intelligence is only as good as your cost data. Make sure your accounting system, purchase records, and job data are accurate and connected.
2. Analyse your margins. Before changing any prices, understand where you actually stand. You might be surprised — and the insights alone are worth the exercise.
3. Track your win/loss rates. If you do quote-based work, start recording whether each quote was won or lost, and at what price. After a few months, patterns emerge.
4. Monitor competitors systematically. Even a simple system that checks competitor pricing monthly and logs it is better than checking when you remember.
5. Make data-informed adjustments. Use the intelligence to make deliberate pricing decisions. Review quarterly, not daily.

The Bottom Line

AI pricing for SMBs isn’t about dynamic algorithms changing prices every five minutes. It’s about understanding your costs better than you do today, monitoring the competitive landscape systematically, and making pricing decisions based on data instead of instinct.

The businesses that get the most from AI pricing aren’t the ones with the most sophisticated algorithms. They’re the ones that finally have clear visibility on what things actually cost and what the market will bear. That’s not glamorous, but it’s worth real money.