Price Discrimination Based on Cost Variation

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来自 University of Virginia 的课程

Cost and Economics in Pricing Strategy

186 个评分

University of Virginia

Cost and Economics in Pricing Strategy

186 个评分

课程 1（共 4 门，Specialization Pricing Strategy Optimization）

How much should you charge for your products and services? Traditionally, businesses have answered this question based on the cost to produce or provide their goods and services. This course shows you the economic factors behind pricing based on cost and the pros and cons of a cost-based pricing approach. Led by Darden faculty and Boston Consulting Group global pricing experts, the course provides the practical and research-based models and methods you need to set prices that maximize your profits. By the end of this course, you’ll be able to: --Apply knowledge of basic economics to make better pricing decisions --Recognize opportunities for price discrimination—selling the same product at different prices to different buyers—and recommend strategies to maximize sales and profits --Calculate three types of price elasticities to determine the impact of price on demand --Analyze and apply different pricing models -Cost-plus pricing -Marginal cost-plus pricing -Peak-load pricing -Index-based pricing --Evaluate the impact of channel intermediaries and customer lifetime value on pricing

从本节课中

Price Discrimination

This week we'll tackle three areas that will help you improve the effectiveness of your pricing strategy. First, we'll take a look at price discrimination and how to set prices for different customer segments to maximize profits. You'll learn about the price and margin waterfall and how creating one for your business can help identify "leaks" that you can prevent. Then we'll examine volume-based pricing, or pricing differently for different volumes to encourage consumption, of a consumer product: Heinz Ketchup. When we're done, you'll be very aware of the impact package size has on your own consumption--and how to use this knowledge to price products.

Intro to Price Discrimination1:51

Cost-plus Pricing5:00

Price Discrimination Based on Cost Variation4:40

Price and Margin Waterfall4:39

与讲师见面

Jean Manuel Izaret
Senior Partner and Managing Director, Leader of BCG’s Global Pricing Practice
Thomas Kohler
Associate Director, Pricing
Marketing, Sales & Pricing Practice
Ronald T. Wilcox
NewMarket Corporation Professor of Business Administration & Senior Associate Dean for Degree Programs
Marketing

On the way to the studio, I bought this bottle of water at the airport, and

I paid $3.99.

I probably could have gotten the same bottle at the grocery store for $1.20.

How come the exact same product can be sold for $4 or for 1.20.

This is called price discrimination.

The fact that the identical product can be sold to different buyers at different sale

prices, and it's also called price differentiation or differential pricing.

I need you to be careful not mixing price discrimination up with

product differentiation.

If you have the Fiji bottle of water which is a recognized brand.

It has very smooth spring water and it's positioned as a premium product.

You can charge $1 20 and the customer is willing to pay this premium price.

Now, if you sell a private label bottle of water that is kind of purified.

It has a no-name brand.

You sell it only in packs of 24 bottles.

Then you created an economic product that

is very different from the branded product.

So you have to careful when you look at

price discrimination that you really talk about the same product.

Not like in this example where you have two very different products

that charge different prices on the market.

But back to price discrimination.

Why do sellers discriminate the price?

Well the answer is two-fold.

Either because they can, or because they have to.

In my airport example.

The seller of the water can charge a higher price,

because he knows I'm trapped.

I'm already through security.

I'm thirsty.

I don't want to go to the water fountain.

I don't have time to sit down and get something at the restaurant.

So I'll pay the price he wants.

But sellers also do it because they have to,

in order to incentivize buyers to buy differently or buy more.

Or because they want to sell to new customer segments that can

afford to pay the higher price.

For the buyer, why does he accept prices discrimination?

Well, in the case of higher prices.

Oftentimes we find that price is less important to them

compared other factors for example, the convenience.

And in the case of lower prices it's easy to explain because either the buyer can't

afford to pay more or he enjoys a good deal.

So let me talk now more about cost based price discrimination.

And I'm going back to this example with the water bottle at the airport.

If you were to talk to the owner of the kiosk that sells the water at the airport,

he would probably say, well I have to charge more because my costs are higher.

The rent is higher at the airport compared to a grocery store.

The labor is higher.

He has longer opening times.

The logistics are more costly to get the bottle through security and to the store.

They're also some other mechanics at play like, a higher willingness to pay or

the higher cost of the next best alternative.

And we will talk about these effects separately.

But does it really justify a three x higher price at the airport compared to

the grocery store?

There is something else going on, and

that is cost-based price discrimination helps sellers to optimize their margins.

In the case of higher cost like at the airport.

The seller would not only pass on his incremental cost but

he will also add an additional markup to his higher cost base and

therefore end up with a higher price.

And if the seller has a cost advantage and lower cost,

he would only pass part of this cost advantage through to his customers.

So what have you learned about price discrimination?

Well, you know now that it's motivated by the sellers to

improve their margins, or to buy, to sell more or differently.

You know the difference now between price discrimination and price differentiation.

And in combination, you know now how it helps to improve your margins.

So I want you to think about, how can you discriminate your prices for

your business to improve your margins?

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