Price Elasticity of Demand in Revenue Maximisation : a case study with sales history data of #CMAX.gg

Abstract

The purpose of this thesis was to determine optimum prices for chosen products in the web gaming services industry using theory of price elasticity of demand and provide information of how much revenue could be increased with these optimum prices. The thesis was prepared to provide support in the sales process of Apprien -dynamic pricing engine. The study was carried out using quantitative analysis on sales history data provided by a web gaming service provider and the methods used for measuring elasticity were arc and point elasticity, single and multiple linear regression as well as interpreting a logarithmic demand curve. The study found that prices should be gradually increased towards the evening both during the weekend and during weekdays. In addition, the prices should be increased during weekends when the demand is higher. There were also signals that the customer base could be further segmented for more efficient execution of Pricing and Revenue Optimisation.