January 6, 2009

Two years ago, the truth dawned on Kelly Mankin and his cohorts at Chrysler Financial."The simplest way to put it is that we realized one day that our pricing was effectively all art and very little science," said Mankin, the auto financing company's vice president for marketing.

"There were multiple examples in the company where we employed demand models in other areas, so why not pricing?"So, managers kicked around the idea of using pricing optimization — using specialized software to crunch all relevant data points and come up with the most profitable price for a given transaction.