Pricing strategy

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PRODUCT OVERVIEW

This is a proven framework used by global strategy consulting firms for Fortune 500 companies. Learn this methodology and enrich your expertise. Then, save time by lifting slides directly from this presentation into your own. This toolkit provides an in depth discussion on Pricing Strategy, including Skimming versus Penetration, Pricing Tactics, Product Adoption Lifecycle, Price Curve Analysis, and Price Sensitivity Analysis. Includes a Pricing Sensitivity Financial Model built in Excel.

DETAILED DESCRIPTION

The Pricing Strategy Toolkit includes both a 40-slide PowerPoint and a Price Sensitivity Excel Financial Model. The PowerPoint portion contains instructional slides around developing a solid pricing strategy, as well as documentation for the included financial model. It is divided into 5 sections: Pricing Strategy (7 slides) Pricing Approach (8 slides) Price Sensitivity Analysis (10 slides) Pricing Tactics and Terminology (11 slides)

Pricing Strategy

This first section presents a detailed discussion around the overarching pricing strategy of Price Skimming or Penetration Pricing. These two strategies are compared and put into the context of where your product sits along the Product Adoption Lifecycle. Advantages and disadvantages are enumerated for both Price Skimming strategy and Penetration Pricing strategy.

Pricing Approach

This section focuses on the quantitative approach to calculating your optimal price point, based on your selected pricing strategy. We walk through a three-phase approach to determining the appropriate price point: 1) data collection, 2) analysis and insights, and 3) pricing. Price curve analysis is introduced, along with several examples illustrating how price curve analysis is used.

Price Sensitivity Analysis

The focus of this section is price sensitivity modeling. We walk through a five-step process to deriving a formula for price sensitivity. This process addresses, defines, and teaches the following concepts: 9 drivers to price sensitivity, elasticity factors, and threshold of no elasticity. The 9 drivers to price sensitivity are as follows: Reference Price Effect Difficult Comparison Effect Switching Costs Effect Price-Quality Effect Expenditure Effect End-Benefit Effect Shared-cost Effect Fairness Effect The Framing Effect

Pricing Tactics and Terminology

This toolkit closes with overviews for a number of pricing tactics. These pricing tactics are as follows: Value Pricing Loss Leader Pricing Psychological Pricing Going Rate Pricing / Price Leadership Tender Pricing Price Discrimination Predatory Pricing Absorption Pricing Marginal Cost Pricing Cost-Plus Pricing