Using Time Value of Money to Evaluate a Project

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来自 University of Virginia 的课程

Cost and Economics in Pricing Strategy

244 个评分

University of Virginia

Cost and Economics in Pricing Strategy

244 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

Channel and Direct-to-Consumer Pricing

Welcome to our final week together in this course! We'll finish by discussing key concepts related to channel pricing--or pricing through the supply chain. You'll learn about double-marginalization, time value of money, and customer lifetime value (CLV)--not only what they are, but how to use them to improve pricing decisions. Then we'll show you three different pricing techniques that you can use to improve direct-to-consumer pricing. You'll finish with a real-world case analysis of Retail Relay, an online grocery ordering and delivery service. You'll be able to recommend a viable approach to their pricing dilemma based on knowledge from this course. Enjoy!

Intro to Channel and Direct to Consumer Pricing2:37

Double Marginalization9:57

Channel Pricing3:48

Using Time Value of Money to Evaluate a Project3:49

Using Time Value of Money to Compare Different Projects4:39

Customer Lifetime Value (CLV)8:46

Measuring CLV3:38

Measuring CLV Examples7:45

Purchase Occasion Probabilities9:57

Case Application: Retail Relay Intro1:31

Case Application: Retail Relay Debrief1:25

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

Hi, Yael here again.

Today we're going to talk about one of fundamental ideas in business.

Time value of money.

Time value of money matters when investments today

yields benefit in the future.

For instance, if you're buying a piece of machinery in order to manufacture and

produce products that you're going to sell in six months or in a year.

You may want to consider how timing affects you.

Or if you're investing in a marketing campaign in order to secure

lifelong customers in the future,

at some point, you may want to think about when those revenues will start coming in.

And how timing affects you there.

To understand better why timing matters when valuing projects,

or valuing business opportunities, let's consider four small examples.

In each of these examples, we're going to consider the same investment, and

the same revenue.

Let's say the investment is equal to 100K and my revenue = 200k.

Consider the following four projects.

In project number one we will consider a situation in which we invest

one 100K today in order to gain 200K today as well.

In project number 2, we'll consider a situation in which we wait a year and

in one year time, we invest 100K in order to gain 200K.

In project number 3 we have our timeline and

in this case we are going to invest 100K immediately today and

in one year time we are going, I will make it clear this is

one year time, we are going to gain our 200K revenue.

And finally, our fourth projects that we'rw going to consider

is a situation in which we get 200K immediately today and

we spend or we invest 100K in one year's time.

Well, how this timing matter in this four situation.

Well, if we look at project number 1 and project number 2, which do we prefer?

Clearly or intuitively,

we might prefer all of our money today than waiting one year to get our funds.

Why is that?

Well, if we have the money today, we can invest it and

have it grow with some interest.

If we have it today, the net of 100 that we are facing here, we might

actually not worry about inflation and what will happen in the future.

And so, getting a net of 100 today is preferred to getting

a net of 100 in one year's time, intuitive.

How about projects 3 and 4.

Well, in project number 3, we're spending the money sooner.

And we're gaining our benefits in the future in one year time.

That might seem inferior or

slightly lasts worthwhile than the idea of getting in them both today.

So this would probably range less than a 100K net.

In project four We're actually getting our revenue immediately,

today, 200k immediately.

And we're postponing our investment by a year, which is great.

We don't have to pay money until a year's time.

And so this seems that on, it will net something larger than 100.

And so if we compare all of these projects We will see that project

number 4 is preferred to all of these combinations.

And all that matters was the timing of whether when we got our revenue and

when we had to spend and pay our investment.

What makes things interesting is that we can use the concept of time value of

money to compare projects that have different investments and

different revenues across different timelines.

And that's what we're going to do next.

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