About this course: 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. Led by 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 -Cost-plus pricing -Marginal cost-plus pricing -Peak-load pricing -Index-based pricing --Evaluate the impact of channel intermediaries and customer lifetime value on pricing
Who is this class for: This course is designed for business professionals and those aspiring to a career in marketing.
Created by: University of Virginia, BCG
Taught by: Jean Manuel Izaret, Senior Partner and Managing Director, Leader of BCG’s Global Pricing Practice
Taught by: Thomas Kohler, Associate Director, Pricing
Marketing, Sales & Pricing Practice
Taught by: Ronald T. Wilcox, NewMarket Corporation Professor of Business Administration & Senior Associate Dean for Degree Programs
Marketing
| Basic Info | Course 1 of 4 in the Pricing Strategy Optimization Specialization |
| Level | Beginner |
| Commitment | 4 weeks of study; 3-4 hours/week |
| Language | English, Subtitles: Romanian |
| How To Pass | Pass all graded assignments to complete the course. |
| User Ratings |
Syllabus
WEEK 1
Pricing Fundamentals
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!
13 videos, 4 readings, 2 practice quizzes
- Video: Three Pricing Lenses
- Reading: Course Overview & Requirements
- Reading: Survey
- Reading: Using Discussion Forums to Deepen Your Learning
- Discussion Prompt: Meet and Greet
- Reading: Top Ten Learner Tips
- Video: What to Expect This Week
- Video: Basic Metrics of Pricing: Margins and Markups
- Video: The Relationship Between Price and Quantity: Demand Schedules
- Video: The Relationship between Price and Quantity: Functional Form
- Video: Cost, Cost Variations and Supply Curves
- Practice Quiz: Practice Quiz on Basic Economics
- Video: Auctions as a Pricing Mechanism
- Video: English Auctions
- Video: Dutch Auctions
- Video: Sealed Bid Auctions
- Video: B2B Auctions
- Practice Quiz: Practice Quiz on Auctions
- Video: Module 1 Takeaways
Graded: Week 1 Pricing Fundamentals Quiz
WEEK 2
Price Discrimination
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.
12 videos, 1 reading, 2 practice quizzes
- Video: Cost-plus Pricing
- Video: Price Discrimination Based on Cost Variation
- Video: Price and Margin Waterfall
- Practice Quiz: Practice Quiz on Cost-plus Pricing
- Video: Product Line Pricing Principles
- Video: Product Line Pricing: Paper Towels
- Video: Product Line Pricing: Ketchup
- Video: Product Line Pricing: Principle 3
- Video: Other Incentives That Lower Costs
- Video: Field Trip to Kroger's Ketchup Aisle: The Heinz Case
- Reading: Case Study: Heinz Ketchup: Pricing the Product Line
- Video: Heinz Case Debrief
- Practice Quiz: Practice Quiz on Product Line Pricing
- Video: Module 2 Takeaways
Graded: Quiz on the Heinz Case
Graded: Week 2 Quiz on Price Discrimination
WEEK 3
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!
13 videos, 2 practice quizzes
- Video: Calculating Regressions
- Video: Interpreting Regression Outputs
- Practice Quiz: Practice Quiz: Regressions
- Video: Price Elasticities
- Video: Cross-Price Elasticity
- Video: Income Elasticity
- Video: Drivers of Price Elasticity
- Video: Drivers of Price Elasticity: Market Share
- Video: Drivers of Price Elasticity: Competitors' Prices
- Video: Calculus: Taking a Derivative
- Video: Price Optimization Considering Demand
- Video: Price Optimization Example
- Practice Quiz: Practice Quiz on Price Elasticities
- Video: Module 3 Takeaways
Graded: Week 3 Quiz on Price Elasticities
WEEK 4
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!
16 videos, 1 reading, 2 practice quizzes
- Video: Double Marginalization
- Video: Channel Pricing
- Video: Using Time Value of Money to Evaluate a Project
- Video: Using Time Value of Money to Compare Different Projects
- Video: Customer Lifetime Value (CLV)
- Video: Measuring CLV
- Video: Measuring CLV Examples
- Video: Purchase Occasion Probabilities
- Video: Case Application: Retail Relay Intro
- Reading: Case Study: Retail Relay
- Discussion Prompt: CLV for New Retail Relay Customer?
- Video: Case Application: Retail Relay Debrief
- Practice Quiz: Practice Quiz on Double Marginalization, Time Value of Money, and CLV
- Video: Marginal Cost Pricing Defined
- Video: Marginal Cost Pricing Airline Industry Example
- Video: Peak Load Pricing
- Video: Index-Based Pricing
- Practice Quiz: Practice Quiz on Pricing Methods
- Video: Module 4 Takeaways
Graded: Retail Relay Case Quiz
Graded: Week 4 Quiz on Channel and Direct-to-Consumer Pricing
Graded: Cost-based Pricing
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