Economic Foundations of Pricing

Overview

Pricing products or services is a challenging decision for many business owners.

What is a good starting point for sound pricing decisions? This course provides an economic framework that lays the foundation for good pricing decisions. This course delves into the impact of cost, competition, and customer side factors on pricing. The course also goes into the company objectives that shape pricing goals.

This course also covers the repercussions of the most recent and globally transformative event (i.e., COVID19) on Pricing.

Syllabus

Week1 : Economic foundations of Pricing
1. What is market clearing price?
2. Understand price setters vs price takers, supply and demand curves.
3. Covid price increases/decreases/no-change

Week 2: Fundamentals of Demand or Customer point of view
1. What is demand?
2. Price response functions
3. Revenue maximization
4. Elasticity

Week 3: Cost based pricing decisions
1. Terms: (marginal cost, fixed cost, incremental cost), CM, operating margin, %margin, mark-up
2. Price optimization
3. Break-even sales change

Week 4: Competition and Objectives
1. Competition based heuristics
2. Understanding objectives and economic framework

Week 5: Economics of Multiproduct Pricing
1. Demand curves and pricing
2. Price discrimination
3. Game theory
4. Auctions