363-1128-00L  Pricing - Theory and Practice

SemesterSpring Semester 2020
LecturersF. Uhrich, F. von Wangenheim
Periodicityyearly recurring course
Language of instructionEnglish
CommentNumber of participants limited to 25.


AbstractPricing 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.
ObjectiveUnderstand 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.