363-1128-00L Pricing - Theory and Practice
|Semester||Spring Semester 2020|
|Lecturers||F. Uhrich, F. von Wangenheim|
|Periodicity||yearly recurring course|
|Language of instruction||English|
|Comment||Number of participants limited to 25.|
|Abstract||Pricing is much more than just a price: lt is about how to convert interest into transaction. Pricing combines like almost no other business discipline quantitative and analytical rigor with qualitative and psychological aspects. |
This course explains the underlying economical and psychological concepts that influence price setting and price perception.
|Objective||Understand underlying theories and concepts of price setting and price perception. Learn how to master pricing from strategy to execution. |
See how diverse pricing can be across industries.
|Content||- Introduction to pricing|
the relevance of pricing & the profit formula
- Pricing theory—3 lenses on pricing & a holistic view on pricing:
cost-based pricing, customer/value-based pricing, competitive pricing & the holistic view on all pricing layers (pricing strategy, pricing execution, pricing enablers)
- Price elasticity—theory & reality:
price elasticity curves, break-even elasticity, typical elasticity values
- Behavioral pricing—cognitive biases:
value perception (loss aversion, transactional utility, precise pricing, power of free), reference frames (anchoring, asymmetric dominance, extremeness aversion, unit framing), certainty effects (IKEA effect, social proof, endowment effect), and flat-rate bias
- Pricing practice—key concepts by industry:
B2B (pricing power, price realization, surcharges, long-tail pricing, one-shot pricing, contract pricing), B2B2C (multi-channel pricing, price waterfall, trade spend, cross-border pricing), B2C (Promo effectiveness, psychological prices, good-better-best pricing, end-of-lifecycle pricing, non-profit/social pricing), eCommerce, digital/software/subscriptions (internet of things, land & expand, freemium, bundling/unbundling, lifecycle)
- Pricing diagnostics & price monitoring:
price clouds, price-mix-reporting, basket analysis
The course is a mixture of front lecture and student homework and presentation.