🤖 AI Summary
This paper addresses the multi-objective optimization of revenue, profit, and customer retention in dynamic subscription pricing. Methodologically, it proposes a real-time pricing decision framework incorporating business-critical hard constraints. The framework integrates clustered price elasticity modeling, churn propensity prediction, and seasonality-aware tree-ensemble demand forecasting, coupled with Monte Carlo risk simulation and constrained multi-objective optimization; modular APIs enable real-time policy recalibration. Its key contribution lies in the first explicit incorporation of hard constraints—including customer experience thresholds, minimum gross margin requirements, and acceptable churn rates—into the pricing optimization model, yielding interpretable, adjustable, and ethically grounded pricing policies. Validated across diverse SaaS scenarios, the framework significantly outperforms static and uniform pricing strategies: it increases prices for high-willingness-to-pay users while shielding price-sensitive segments, thereby achieving a balanced trade-off between revenue growth and user trust.
📝 Abstract
This paper presents a marketing analytics framework that operationalizes subscription pricing as a dynamic, guardrailed decision system, uniting multivariate demand forecasting, segment-level price elasticity, and churn propensity to optimize revenue, margin, and retention. The approach blends seasonal time-series models with tree-based learners, runs Monte Carlo scenario tests to map risk envelopes, and solves a constrained optimization that enforces business guardrails on customer experience, margin floors, and allowable churn. Validated across heterogeneous SaaS portfolios, the method consistently outperforms static tiers and uniform uplifts by reallocating price moves toward segments with higher willingness-to-pay while protecting price-sensitive cohorts. The system is designed for real-time recalibration via modular APIs and includes model explainability for governance and compliance. Managerially, the framework functions as a strategy playbook that clarifies when to shift from flat to dynamic pricing, how to align pricing with CLV and MRR targets, and how to embed ethical guardrails, enabling durable growth without eroding customer trust.