Success Stories

A story about Strategic Approach to Risk-Based Pricing


The equipment leasing industry, while essential for enabling businesses to access necessary machinery and tools without the heavy burden of ownership, faced a critical challenge that limited its competitiveness and market reach. Traditional pricing models, based predominantly on fixed interest rates determined by client risk levels as assessed by credit bureaus, were proving to be a significant impediment. This one-size-fits-all approach not only stifled the potential for market expansion but also risked alienating customers with its lack of flexibility and customization. To address this, a leading company in the sector embarked on an innovative journey to overhaul its pricing strategy, aiming to create a more dynamic and responsive model that would cater to a diverse client base without compromising on profitability.

The fundamental issue at hand was the industry-standard practice of assigning fixed interest rates for equipment leasing based on a customer's risk profile. This method, heavily reliant on credit bureau data, did not adequately account for the nuanced and varied nature of risk, nor did it allow for the incorporation of other critical factors such as the cost and depreciation of assets. As a result, the company found itself at a competitive disadvantage, unable to offer tailored pricing solutions that could meet the varied needs of potential clients while ensuring the desired levels of profitability were maintained.

Proposed Solution

To tackle this challenge head-on, the company developed a cutting-edge dynamic pricing tool that integrated a wide array of variables beyond just credit risk. This tool considered the market cost of the leased assets, their expected depreciation over time, the company's financial indicators, and other relevant factors. It was designed to be highly adaptable, allowing for adjustments in down payments and credit terms to offer unparalleled flexibility in pricing. This innovative approach enabled the company to craft personalized leasing options for its clients, effectively bridging the gap between customer needs and business objectives.


The implementation of the dynamic pricing tool marked a turning point for the company, yielding remarkable outcomes that reshaped its market positioning and operational efficiency. Firstly, it broadened the company's market reach, enabling it to cater to a wider spectrum of clients. The tool's flexibility allowed for competitive pricing for low-risk clients while also accommodating higher-risk segments with appropriately priced offers.

Moreover, the dynamic pricing model ensured that profitability was not sacrificed for competitiveness. By carefully balancing risk, asset depreciation, and market dynamics, the company could maintain healthy margins across its portfolio. This holistic approach to pricing represented a significant leap forward from the rigid, one-dimensional models of the past, setting a new industry standard for innovation and customer service.


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