FULL TUTORIAL: Price Elasticity and Optimization in Python (feat. pyGAM)

Hey future Business Scientists, welcome back to my Business Science channel. This is Learning Lab 87 where I shared how I do Price Elasticity Modeling and Price Optimization in Python. This FULL TUTORIAL is JAMMED to the brim with value. I cover an in-depth Python Price Elasticity and Optimization workshop that covers exploratory analysis, modeling events, working with outliers, using generalized additive models (GAMs) with pyGAM, and more!
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Table of Contents
00:00 Introduction to Price Elasticity & Optimization in Python
01:22 Agenda: The 4 Things We Cover Today
03:09 Why listen to me (my background)
06:19 Python Price Optimization (FULL CODE TUTORIAL)
07:35 The VSCode Workshop Files
09:10 Part 1: Expectile GAM Primer
12:10 GAM Modeling: 1 Price-Demand Model with GAMs
16:36 Part 2: Price Elasticity Modeling and Optimization
19:40 Data Preparation: Adding Is Event and Revenue
22:17 Exploratory Data Analysis for Price Elasticity
24:46 Special Event Analysis (Outliers)
31:20 Story: My Dinner with a $1Billion Dollar Per Year Company (How they price)
34:11 Linear Regression: Modeling the Effect of Events
41:05 GAMs: Modeling the "Every-Day" Price
47:00 Visualization: Price-Quantity Model Profiles
48:45 Price Optimization Objective: Maximize Revenue
51:51 Visualize the Revenue Optimization
55:32 GAMs: Modeling the "Special Event" Price
1:01:29 Conclusions: Why do companies hire data scientists?
#DataScience #MachineLearning #Python

[@hellskitchens]

Great example of price optimization. I work for a global retailer and work heavily on data science tools. Its great to see other methods and ways to improve. Keep going! I can tell you 150k is just the beginning!

[@hassanjaved4091]

Great content Matt! I have learnt a lot and thank you for putting out such detailed lectures.

[@youhavebewarned]

Thank you algorithm for guiding me here.

[@BusinessScience]

You got it! Thanks for watching. 😀

[@robertsienkiewicz8063]

Great video. One question. Often times prices are not set out for equal periods of time. Therefore a decline in qty doesn’t really mean much if the price was only valid for a couple days. I think really the only way around this is adjusted for the time period and seasonality. Any recommendations on how to approach this?

[@starshipdestroyer1170]

Could you please share the link for accessing the data and python code related to Price Elasticity and Optimization? or any process to get atleast data?

[@BusinessScience]

You will need to become a learning labs pro member. university.business-science.io/p/learning-labs-pro

[@spikeydude114]

Am I off base to try to analyze sales compared to 'economic strength'? So instead of price vs volume I would do sales vs inflation rate...is that possible with this approach?

[@BusinessScience]

No I dont think you're offbase. I would test adding columns in for different days. For example if you have pricing data in different quarters or even month and the inflation rate is changing, add that in as a column. There also may be lag effects or leading effects so add lags/leads as appropriate.

[@flyingdutchman9804]

Hey, bud, I love your projects section and the work that you put into it!! I have a genuine question. - This is nice and all, but steps 1-7 in the DS process are fairly straightforward and standard (some may argue that steps 3 and 4 may be combined). How is this worth $800 when someone can easily complete steps 1-7 and simply learn how to format and map results to Streamlit? I am curious because all the libs are open source, and there are abundant free resources for Streamlit (worst case scenario, a Udemy course on Streamlit is $10-$15.

[@BusinessScience]

When we get you a data science job, that’s $100K to $150K - and the price that you pay $800 seems reasonable to us. But yes, good luck with udemy or any of those programs. If you can get a job, then go for it. When you can’t, we will be here.

[@flyingdutchman9804]

​@@BusinessScience Already secured one using Google/docs/stackoverflow/KZbin/udemy/Kaggle :) Just interested in learning more. Pardon my confusion. Are you claiming that you get students a Data Science job or a money-back guarantee when you say, "When we get you a data science job, that’s $100K to $150K"? - If so, this might be a great deal, and I may be able to send a few people your way!

[@user-jq1yw1ik6q]

please provide the dataset

[@BusinessScience]

It’s available in Learning Labs Pro. You can become a member here: university.business-science.io/p/learning-labs-pro?el=youtube

[@arturocdb]

Universiyy is antiquate?... i just want to let you know that price optimization only applies on monopolistic scenario?... i learn that in a basic micro economics course in university, i recommend you to take a baisc course in economics, because the model that you are showing only applies to monopolistic market case.... you did not mention that litle detail...i'm data scientist specialized in pricing, i can teach you some really cool thing than can be a applied to a real world problems...., your code can not be applied...

[@BusinessScience]

That’s great. Except you left out one small detail - where is your tutorial?

[@superuser8636]

@@BusinessScienceI got you but don’t even play this guy’s game. But he does have a point. I do think university is useful but it isn’t a barrier to entry anymore when there are amazing tutorials like this that really CAN make 150k$+… That means people like me have to compete and get a higher level of education beyond a bachelors since courses like these are so great. That doesn’t take away from the amazing contents of this course and I’m sure you give more information in the courses than this FREE FULL tutorial… but still, 6+ years of university is tough to compete with with 15-30 weeks of education but you really distill probably 4 years of techniques and for that, I salute you 🫡 That is to say, I have learned a lot from your videos as a professional myself

[@BusinessScience]

Thank you for this! I see a lot of negativity these days and it baffles me. Comments like this really help put things into perspective. Thank you!

[@tighthead03]

When can we expect the superior language version to be uploaded??😂

[@BusinessScience]

It might be coming tomorrow. ;)

[@tighthead03]

@@BusinessScience great stuff Matt I'm looking forward to it