247 articles found in this category.

Profiting with Yield Pricing

December 2005 Pricing

Increasing numbers of companies are taking elements of “yield pricing” or “yield management,” a pricing strategy originally developed for perishable service sector products and adapting this strategy to new uses. Yield management as been used since the mid-80s in the lodging industries and in airline ticketing. The key variables are: (1) the perishable nature of […]


The Peril of Price Cuts

December 2005 Pricing

When I first started teaching marketing to DePaul University undergraduates, I used a textbook that had short one-page cases. In solving the problems and challenges presented in these cases, the students’ universal solution to virtually all the problems ailing any company was “to lower prices.” In reality, cutting prices is not only a lazy and […]


Pricing Opacity

September 2004 Pricing

In consumer markets, prices are transparent. Anyone wanting to know the price of a good or service, competitors and prospective customers alike, can easily call for a price quote or look-up the list price. In contrast, prices are opaque in many business markets. Even in markets where price lists are available, the practice of discounting […]


4+1 Pricing Mechanism

June 2004 Pricing

When businesses charge different customers different prices, what are the determinant factors? Is this pure value-perception pricing or are underlying factors used to justify differential pricing? After reviewing dozens of pricing mechanisms in business markets, I have uncovered four plus one common factors within pricing mechanisms. The basic four are Volume, Complexity, Risk, and Delivery. […]


Legality of Price Discrimination

June 2004 Pricing 1 Comment

Are pricing mechanisms that charge different prices to different customers in business markets legal? More than any other issue, concerns of the legality of price discrimination are raised when discussing pricing mechanisms. Due to the well publicized legal cases against executive greed, predatory pricing, and outright fraud; managers and have righteously steered clear of any […]


Pricing Electricity: More Questions than Answers

May 2004 Energy & Utilities, Pricing

How are prices set at the industry level? In a competitive market, Adam Smith’s invisible hand drives prices to a dynamic equilibrium set by suppliers’ willingness to produce at a price and consumers’ willingness to purchase. Yet residential electricity markets are hardly competitive. Since the Public Utility Holding Company Act of 1935, government regulations have […]


Are “Best Practices” Yielding “Worst Results” in Pricing?

April 2004 Pricing

Executives favor using “Best Practices” when managing business activities. For the most part, these “Best Practices” enable businesses to deliver the optimal performance. Yet, an unchecked deployment of “Best Practices” for managing prices is setting some companies up for disaster. By considering attitudes towards price variances and sales incentives, we find that many companies are […]


The Case for Price Discrimination

March 2004 Pricing

It is a simple fact: different customers will place different values on your offering. Some will greatly value your product or service while others will value it less. There is little to profit in driving all customers towards a homogeneous demand level, but there is much to profit in taking advantage of the heterogeneity in […]