Bayesian Pricing

Bayesian pricing is a method that uses past data and current information to set prices adaptively. It applies Bayesian probability, which updates the likelihood of certain outcomes as new data becomes available. For example, a seller might start with an initial belief about how much customers are willing to pay and then refine this belief as more purchasing data is collected. This approach helps optimize prices by continuously learning and adjusting in response to market behavior, leading to more informed pricing strategies that can improve revenue and competitiveness over time.