How much should you charge for your products and services? Traditionally, businesses have answered this question based on the cost to produce or provide their goods and services. This course shows you the economic factors behind pricing based on cost and the pros and cons of a cost-based pricing approach. Developed at the Darden School of Business at the University of Virginia, and led by top-ranked Darden faculty and Boston Consulting Group global pricing experts, the course provides the practical and research-based models and methods you need to set prices that maximize your profits.
By the end of this course, you’ll be able to:
--Apply knowledge of basic economics to make better pricing decisions
--Recognize opportunities for price discrimination—selling the same product at different prices to different buyers—and recommend strategies to maximize sales and profits
--Calculate three types of price elasticities to determine the impact of price on demand
--Analyze and apply different pricing models
-Marginal cost-plus pricing
--Evaluate the impact of channel intermediaries and customer lifetime value on pricing
Welcome to the first week of Cost and Economics in Pricing Strategy course! We'll begin our study of pricing by looking at some basic economic principles relevant to pricing, such as cost and cost variations and what that implies about the supply curve. Then we'll take a closer look at one pricing mechanism: auctions. You will never look at eBay the same!
This week we'll tackle three areas that will help you improve the effectiveness of your pricing strategy. First, we'll take a look at price discrimination and how to set prices for different customer segments to maximize profits. You'll learn about the price and margin waterfall and how creating one for your business can help identify "leaks" that you can prevent. Then we'll examine volume-based pricing, or pricing differently for different volumes to encourage consumption, of a consumer product: Heinz Ketchup. When we're done, you'll be very aware of the impact package size has on your own consumption--and how to use this knowledge to price products.
Common Pricing Metrics: Elasticities
This week we'll dive deep into the world of demand modeling. We'll start with a brief overview of regressions--what they are, why they're useful and how to calculate them using Excel. Then you'll get a chance to use regressions as you learn about three types of elasticities--relationships between demand and price or other factors--and the drivers of these elasticities. We'll finish with a price optimization based on demand models--a truly useful method for pricing based on economic factors. By the end of this week, you'll be able to impress your colleagues and friends with your knowledge of mathematical models and how to use them to inform your pricing strategy!
Channel and Direct-to-Consumer Pricing
Welcome to our final week together in this course! We'll finish by discussing key concepts related to channel pricing--or pricing through the supply chain. You'll learn about double-marginalization, time value of money, and customer lifetime value (CLV)--not only what they are, but how to use them to improve pricing decisions. Then we'll show you three different pricing techniques that you can use to improve direct-to-consumer pricing. You'll finish with a real-world case analysis of Retail Relay, an online grocery ordering and delivery service. You'll be able to recommend a viable approach to their pricing dilemma based on knowledge from this course. Enjoy!
Jean Manuel Izaret, Thomas Kohler and Ronald T. Wilcox
Start your review of Cost and Economics in Pricing Strategy
D A completed this course, spending 3 hours a week on it and found the course difficulty to be medium.
The course introduces you to pricing. As such, it touches upon various aspects such as basics of microeconomics including demand function and price elasticity; pricing strategies (cost plus, target cost, peak load, marginal cost pricing), different types...
The course introduces you to pricing. As such, it touches upon various aspects such as basics of microeconomics including demand function and price elasticity; pricing strategies (cost plus, target cost, peak load, marginal cost pricing), different types of auctions, and then a mix of various concepts and instruments such as customer lifetime value, margin waterfall and cost optimization, linear regression, consumption adjusted margin, channel marketing and more. Overall the course gives knowledge on many things but you do not master a specific topic. Rather, it opens a lot of windows and you could choose what to dive into later in your free time or through another course.
The quizzes were made well and supported the learning. There is zero involvement and participation of the course team. The final assignment is also challenging and allow you to apply the pricing options but require you to play a lot of Excel. However this is a peer-review assignment and the feedback you receive is not satisfactory.
The professor from the university who gives most of the lectures seems to be an experienced (online) instructor and delivers the content in an engaging way.
If you did not study economics before, I doubt if you could really gain anything through the quick overview of the topics that is given. You might be distracted by the math and formulas. However if you did study economics but want to learn how pricing is done in the business world, this course is a very good introduction.
Lola Jiang completed this course, spending 4 hours a week on it and found the course difficulty to be medium.
This is a solid course to introduce you to the basics of pricing. Easy to follow and supplemented with real life cases. The class is taught from both academic and industry perspective. Very engaging.