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; 2-4 hours/week; the last week there is a longer project to complete |
| 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
- Материал для самостоятельного изучения: Course Overview & Requirements
- Материал для самостоятельного изучения: Survey
- Материал для самостоятельного изучения: Using Discussion Forums to Deepen Your Learning
- Вопрос для обсуждения: Meet and Greet
- Материал для самостоятельного изучения: 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
- Тренировочный тест: Practice Quiz on Basic Economics
- Video: Auctions as a Pricing Mechanism
- Video: English Auctions
- Video: Dutch Auctions
- Video: Sealed Bid Auctions
- Video: B2B Auctions
- Тренировочный тест: 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
- Тренировочный тест: 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
- Материал для самостоятельного изучения: Case Study: Heinz Ketchup: Pricing the Product Line
- Video: Heinz Case Debrief
- Тренировочный тест: 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
- Тренировочный тест: 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
- Тренировочный тест: 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
- Материал для самостоятельного изучения: Case Study: Retail Relay
- Вопрос для обсуждения: CLV for New Retail Relay Customer?
- Video: Case Application: Retail Relay Debrief
- Тренировочный тест: 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
- Тренировочный тест: 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
FAQs
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Creators
University of Virginia
A premier institution of higher education, The University of Virginia offers outstanding academics, world-class faculty, and an inspiring, supportive environment. Founded by Thomas Jefferson in 1819, the University is guided by his vision of discovery, innovation, and development of the full potential of students from all walks of life. Through these courses, global learners have an opportunity to study with renowned scholars and thought leaders.
BCG
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy.
We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with offices in more than 90 cities in 50 countries. For more information, please visit bcg.com.
Pricing
| Purchase Course | |
|---|---|
| Access to course materials | Available |
| Access to graded materials | Available |
| Receive a final grade | Available |
| Earn a shareable Course Certificate | Available |
Ratings and Reviews
Concepts in this course are challenging but the class is setup for students to succeed. I really enjoyed this course and would recommend it to anyone looking to learn more about pricing strategy.
Very informative and practical
Even if you are familiar with the basics of microeconomics, and cost structures, this course combines it all together to provide a new perspective of using these models and concepts in pricing.
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I would have loved if we were able to see a complete example, similar to the one we have done in the end of the course.