Enhancing the Business Model: Automating the Recommended Retail Price Calculation of Products

Abstract

The purpose of this paper is to find an automated pricing algorithm to calculate the real cost of each product by considering the associate costs of the business. The methodology consists of two main stages. A brief semi-structured survey and a mathematical calculation the expenses and adding them to the original cost of the offered products and services. The output of this process obtains the minimum recommended selling price (MRSP) that the business should not go below, to increase the likelihood of generating profit and avoiding the unexpected loss. The contribution of this study appears in filling the gap by calculating the minimum recommended price automatically and assisting businesses to foresee future budgets. This contribution has a certain limitation, where it is unable to calculate the MRSP of the in-house created products from raw materials. It calculates the MRSP only for the products bought from the wholesaler to be sold by the retailer.