Economic foundations of Pricing

Overview

This course starts with a basic understanding of the classical theory of pricing. It then progresses towards understanding and analysing cost-based pricing heuristics, demand curve analysis, and competition-based pricing. 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 pricing in the most recent and globally transformative event (i.e., COVID19).

Syllabus

Week1 : Economic foundations of Pricing1. 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 view1. What is demand?2. Price response functions3. Revenue maximization4. Elasticity
Week 3: Cost based pricing decisions1. Terms: (marginal cost, fixed cost, incremental cost), CM, operating margin, %margin, mark-up2. Price optimization3. Break-even sales change
Week 4: Competition and Objectives1. Competition based heuristics2. Understanding objectives and economic framework
Week 5: Economics of Multiproduct Pricing1. Demand curves and pricing2. Price discrimination3. Game theory