June 18, 2020 @ 15:54 by Richard Dawson
A Middlesbrough-based price optimisation platform has raised £650,000 in a funding round with support from Mercia Equity Finance, part of the Northern Powerhouse Investment Fund (NPIF).
Bubo.AI’s platform uses artificial intelligence (AI) to analyse customers’ behaviour to understand what they are willing to pay, then recommends the optimum price to sales staff.
The platform is designed for wholesalers and distributers such as builders’ merchants and food services and allows them to base their prices on customer value rather than cost, yielding an average 3 per cent increase in profit.
Bubo.AI was founded by Teesside entrpreneur, Alan Timothy and data analyst Marcin Lisowski who had previously worked together to create a pricing system for a global autoparts supplier.
After failing to find a solution on the market that satisfied their need, the duo decided to create their own instead. Company profits increased by almost £2 million in six months as a result.
Bubo.AI is now used by clients such as building materials firm, Tarmac, and the company has partnered with Teesside University and other institutions to promote the use of AI in pricing.
Alan Timothy, CEO of Bubo.AI, said: “Pricing has previously appeared like a dark art, and traditional approaches are problematic and not very effective.
“Trying to price match with competitors can lead to price erosion, especially in a downturn, while sales staff often resort to discounting to meet targets.
“Now for the first time our solution means companies can use customer value-based pricing, which could be key for them to recover revenue and build a roadmap to profitability in the post-Covid world.”
Simon Crabtree, investment manager at Mercia, added: “Research shows that smart pricing is the most effective way to increase profits.
“However, getting it right is difficult, especially for big distributors or wholesalers with many different products and branches. Bubo.AI could help companies to revolutionise their approach to pricing and transform their profitability.”
Tees Valley Mayor Ben Houchen said: “Bubo.AI is a great example of an amazing digital company that’s gone from strength to strength right here in Middlesbrough and just goes to show just how much digital talent Teesside, Darlington and Hartlepool has to offer.”