Pricing Profitably for Your Product's Value

Pricing is one of the most powerful ways to improve – or destroy – profits. This course can help you improve the pricing practices at your company or allow you to help your clients make better pricing decisions.

Price is a function of the value provided to customers. This course focuses on customer perceptions of value and their willingness to pay for that value. 

I'll start by explaining the concepts and calculations of value-based pricing. Understanding what customers value and whether they are willing to pay for that value should drive your company's strategies and costs. 

Who determines value? The customer makes the ultimate decision when they decide what price they are willing to pay for a product and which product to buy (if any). Behavioral finance offers insights into how customers determine value. I'll explain how.

I'll walk through price differentiation and segmentation concepts and examples. You'll then learn about the price-response function and how to estimate it. Estimating the price-response function helps a company better project sales volumes at a new price, which is important for deciding whether to change prices.

I'll finish this course by touching on pricing ethics. Customers must perceive pricing to be fair for them to be willing to buy a product from a company.

This course is one of three video-based pricing courses. The other two courses are:

• Pricing Profitably Analysis and Processes: I explain how to analyze pricing decisions to improve profitability. Cost-plus pricing is a popular pricing methodology, but I explain its weaknesses. I also cover how many parts of a company can work together to improve pricing.
• Pricing Profitably in the Face of Competition: The focus of this course is how other companies can impact prices. I show how to analyze the profitability at stake by responding to competitor pricing. You'll learn common pricing strategies relative to market pricing. Finally, I'll show how to identify and reduce poor discounting practices.

These courses focus on financial management and profitability analysis of pricing. A Deloitte pricing effectiveness benchmark study found that: "Companies that actively pursue pricing as an important part of their strategy typically outperform industry peers on several financial metrics… Companies that are pricing leaders are 26 percent better at managing true profitability."