A Reinforcement Learning Approach to Dynamic Pricing

Pavan Mullapudi

doi:10.71097/IJSAT.v16.i4.9558

A Reinforcement Learning Approach to Dynamic Pricing

Author(s)	Pavan Mullapudi
Country	United States
Abstract	Dynamic pricing represents a critical strategic challenge in modern e-commerce, where firms must navigate fluctuating demand, inventory constraints, and aggressive competitor actions. Traditional static and heuristic-based pricing models often fail to capture the complex, non-linear dynamics of competitive digital markets, leading to suboptimal profitability. This paper proposes a model-free reinforcement learning (RL) framework to address this challenge. Specifically, we design, implement, and evaluate a Q-learning agent capable of learning an optimal, state-dependent pricing policy. The agent is trained and evaluated within a simulated market environment constructed from the publicly available "Retail Price Optimization" dataset from Kaggle, which provides a rich feature set including historical sales, product characteristics, seasonality, and, crucially, competitor pricing data. The problem is formulated as a Markov Decision Process (MDP), where the agent's state incorporates its price position relative to competitors, competitor price trends, and seasonal factors. The agent's performance is benchmarked against three baseline strategies: static pricing, a reactive "follow-the-leader" heuristic, and random pricing. The results demonstrate that the Q-learning agent achieves a substantial increase in total cumulative profit over the evaluation period, outperforming all baselines by learning a nuanced policy that strategically balances price adjustments in response to market conditions. This work provides a practical and reproducible blueprint for applying reinforcement learning to optimize pricing decisions in a simulated yet realistic competitive retail environment, highlighting the potential of RL to automate complex strategic decision-making.
Keywords	Dynamic Pricing, Reinforcement Learning, Q-Learning, Price Optimization, Retail Analytics, Markov Decision Process.
Field	Engineering
Published In	Volume 16, Issue 4, October-December 2025
Published On	2025-11-23
DOI	https://doi.org/10.71097/IJSAT.v16.i4.9558
Short DOI	https://doi.org/hbb8fw

View / Download PDF File

doi

CrossRef DOI is assigned to each research paper published in our journal.

IJSAT DOI prefix is
10.71097/IJSAT

Downloads

Research Paper Format Copyright Permission Form and Undertaking Form Cover Page Vol 16 Isu 3 Cover Page Vol 16 Isu 2 Cover Page Vol 16 Isu 1

All research papers published on this website are licensed under Creative Commons Attribution-ShareAlike 4.0 International License, and all rights belong to their respective authors/researchers.

CC-BY-SA

About IJSAT Fees & Payment Current Issue Publication Archive	Submit Research Paper Track Submission Status Publication Guidelines Publication Ethics Peer Review & Plagiarism	Join as a Reviewer Editors & Reviewers Reviewer Referral Program Get Reviewer Membership Certi.	Website/Journal Policies Usage Policy Content Policies Privacy Policy

Contact Us	Message on WhatsApp	+91-9687-182-185	editor@ijsat.org

International Journal on Science and Technology

A Widely Indexed Open Access Peer Reviewed Multidisciplinary Bi-monthly Scholarly International Journal

A Reinforcement Learning Approach to Dynamic Pricing

Share this