Powered by Harvard Business Publishing materials, this module introduces the fundamentals of getting prices right. First, it introduces value pricing, which requires a detailed understanding of a firm’s product’s true economic value (TEV) for a specific customer. Value pricing also requires a decision to divide that value between the firm (providing the firm with its incentive to sell) and the customer (providing the customer with an incentive to buy). After covering the key elements of the value-pricing approach, the Reading explains the concepts of price customization, consumer sensitivity to price, and the impact of price on the organization’s profitability. Readers also learn how quantitative research and managerial judgment are used to make optimal pricing decisions.
The Reading includes three Interactive Illustrations: “The Value-Pricing Thermometer,” which explores how the setting of a product’s price affects the allocation of value between a customer and the firm; “Breakeven Analysis,” which helps readers understand the output required to cover the fixed and variable costs in various scenarios fully, and the impact on company revenues and profits; and “Marginal Math,” which explains marginal math and the interplay among price, margin, unit sales, and price elasticity in low-margin and high-margin settings.
Learning Objectives
- To highlight the importance of “getting pricing right.”
- To explain the value-based approach to pricing and the key inputs to the value-pricing decision.
- To discuss the concept and role of price customization.
- To explain price sensitivity as the fundamental consumer-side consideration in the pricing decision.
- To explain the drivers of profitability and the key measures of pricing’s economic impact on the firm.
Delivery Method
Online
Credential
Certificate of Compeltion
Number of Credits
1
Duration
The module will be available for 120 days.
