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Effective Price Management


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Based on a article on 8 sins of pricing. See a longer version of this at

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Effective Price Management

  1. 1. Effective Price Management Rags Srinivasan
  2. 2. 8 Pricing Problems and Solutions Problem Solution Cost Based Pricing Value Based Pricing Price Leakage Price Realization Price erosion from low-margin sales Maintain Reference Price Incorrect cost allocation Focus on relevant costs Treating all customers the same Segmentation and Versioning Aggregating costs Tracking Cost to Serve each customer Not knowing effect of pricing Understanding Price Elasticity Product Margin Customer Margin Problems Adapted from “8 Deadly Sins”, James Mason,
  3. 3. 3 Components of Effective Price Management • Segmentation and Versioning Value-add to • Value based pricing Segments • Price realization • Reference price • Price elasticity Incremental • Relevant costs Analyses Customer • Cost to serve customers Margin • Total revenue per customer
  4. 4. See a longer version of this at IterativePath Blog