Price Analytics

Name: Price Analytics
Rating: 3.9 (181 reviews)

Learn how to price a product or service for better marketing strategy

Created byScandinavian Institute of Business Analytics

Last updated 6/2020

English

English [Auto],

What you'll learn

You will learn advantages and disadvantages of 11 pricing techiniques
You will learn how to evaluate price based on your financial targets
You will be able to conduct break-even analysys
You will learn Net Present Value Capital Budgeting Model
You will be introduced to Internal Rate of Return model
You will learn how to use Excel and Data Analysis options in Excel for evaluating price
You will learn concept of Price Elasticity and Optimal Pricing
You will learn how to collect data for and and operate with Demand Curve

Course content

4 sections • 31 lectures • 42m total length

Pricing Technique1:11
Assess pricing and price discrimination for Lars coffee mugs by exploring demand-based pricing, everyday low pricing, going rate pricing, markup, penetration, value in use pricing, tiered pricing, and variant pricing.
Creaming Pricing0:54
Target the top 1 to 5 percent with a high introductory price. Use the initial revenue to offset development costs, but avoid this approach if competitors offer cheaper alternatives.
Demand-Based Pricing1:06
Use demand-based pricing to maximize profit by adjusting prices to market demand; requires a known demand curve and data on quantities sold at different prices, which can be time consuming.
Everyday Low Pricing1:23
Everyday low pricing maintains consistently low prices to attract price-sensitive customers and boost sales quantities while avoiding deep discounts and promotions, supporting low-cost operations and smoother demand.
Going Rate Pricing1:20
Study how going rate pricing aligns prices with competitors to capture a market price, yielding uniform pricing across the industry while warning about antitrust risks and potential price wars.
Markup Cost Plus Pricing0:58
Learn markup cost plus pricing and cost plus pricing, adding an arbitrary percentage to unit costs to set price; fast and easy, but ignores demand and may misestimate profit.
Example - Markup Cost Plus Pricing1:28
Calculate unit cost from variable costs and allocated fixed costs, then apply a 20% markup to set the market price.
Penetration Pricing0:42
Explore how penetration pricing sets prices very low to attract new customers and expand market share, boosting sales volume while risking short-term profitability and price wars.
Prestige Pricing0:35
Prestige pricing sets high prices to signal high quality or status, drawing on image and perceived value pricing to drive premium revenue.
Target-Return Pricing1:00
Target-return pricing sets prices to hit a defined ROI and is quick to calculate. However, it may miss market demand and relies on sales forecast assumptions.
Tiered Pricing0:52
Tiered pricing sets different price points for levels of features or quality, enabling customers to self-select the best fit and helping retailers explain value; complex offerings may require skilled salespeople.
Value-in-Use Pricing1:02
Value-in-use pricing sets prices based on the value to customers, making them indifferent between options, captures customer-perceived benefits, and separates price from cost for profitability.
Variant Pricing1:07
Explore variant pricing, which sets different prices for product variants to capture the value of different market segments, highlighting advantages and the need for market research and stocking variant offerings.
Summary1:27
Explore pricing techniques such as creaming pricing, demand-based pricing, everyday low pricing, going rate pricing, markup cost plus pricing, penetration pricing, prestige pricing, tiered pricing, and variant pricing.

Pricing Assessment0:53
Assess pricing impact on organizational goals using breakeven analysis, net present value, and internal rate of return to evaluate profit and ROI for a large coffee mug company.
Break-even Analysis1:18
Use break-even analysis to determine the sales quantity needed for profitability and whether a proposed price meets revenue goals, noting its simplicity and key assumptions.
Break-even Analysis Process1:38
Explore breakeven analysis by distinguishing fixed and variable costs and testing prices to meet breakeven. Compute unit cost as fixed costs per unit plus variable cost, and calculate breakeven volume.
Example - Break-even Analysis1:44
Calculate fixed costs, variable costs, and unit cost to set a 40 euro price and determine a 10000-unit break-even, given 200000 euro fixed costs and 10 euro variable cost.
Net Present Value Capital Budgeting Model2:16
Apply the net present value capital budgeting model to evaluate a project's cash flows and price-driven revenues, determining if it meets the return on investment under the discount rate.
NPV Analysis Process1:13
Identify the initial investment, test prices via breakeven techniques, forecast annual unit sales, calculate annual cash flows, and determine net present value using the standard formula.
Example - NPV Analysis Process2:04
Calculate net present value by forecasting unit sales, price, and cash flows from an initial 250,000 euro investment, then evaluate the project using the npv decision rule.
Internal Rate of Return Capital Budgeting Model1:46
Compute internal rate of return (IRR) by discounting cash flows and setting NPV to zero. Evaluate IRR against the hurdle rate or cost of capital to determine financial justification.
IRR Analysis Process1:02
Estimate the initial investment, test a price, forecast annual units sold from historical and competitive data, compute cash flows, and solve the NPV equation to find IRR.
Example - IRR Analysis Process3:09
Calculate the internal rate of return for a coffee mug project by solving the net present value equation to zero. Verify the IRR of 10.6% using Excel solver.

Profitable Pricing0:30
Explore profitable pricing by incorporating consumer demand into pricing strategies to boost profitability, noting demand often declines with price rises, except for luxury electronics, jewelry, and perfumes.
Price Elasticity1:45
Explain price elasticity as rate of quantity demanded change with price, using absolute value, and distinguish elastic and inelastic demand with short-term and long-term effects, including frozen vegetables and gasoline.
Gather the Demand Data1:01
Gather the demand data using surveys, analysis of past sales data, and market experiments to see how quantity demanded changes with price, discounts, and promotions.
Example - Price Elasticity Calculation1:19
Explore a price elasticity calculation from market experiments showing a linear relationship in coffee mug demand as price changes from €15 to €40, with elasticity around -0.2 and inelastic demand.
Optimal Pricing0:38
Define the optimal price as the price yielding maximum profit by analyzing the demand curve at each point. Compute revenue and cost to determine profits.
Example - Optimal Price Calculations0:58
Explore optimal price calculations by computing revenue, cost, and profit for Varas coffee mugs; identify that maximum profit occurs at quantity 2, revealing the optimum price under given market conditions.

Requirements

Basic knowledge of Excel

Description

Don’t you know that price is the first thing majority of customers look at? Marketing consulting firms estimate that improving pricing by 1 percent can result in as much as 10 percent increased profits. Price Analytics is a skill of high demand among marketing manager who work on the marketing strategy. And not only them! Entrepreneurs, business executives, and senior decision makers often feel shaky when it comes to pricing assessment.

Pricing is one of the major elements of marketing. Price analytics is one of the key elements of it.

The technology of pricing is an art. Rounding off the numbers may be good for small endeavors but never for an organization. The art of setting prices for products or services has been an ever-challenging task for organizations. Paying attention to the changing economic system, strong competitors in the marketplace, and client budget, the secret to success of pricing goods has been based mainly on a psychological assessment of the client and solid price analytics.

Few institutions offer education in price analytics, and none offer online courses on it. The Scandinavian Institute of Business Analytics has taken a step forward and has developed unique courses in business analytics for online education.

In the course, Price Analytics by SCANBA, you will follow Lars and his company, Lars Coffee Mugs.

Together with Lars, you will study different pricing techniques, pricing assessment methods, concepts of profitable pricing, and learn about price discrimination.

You will learn:

11 pricing techniques
3 pricing assessment methods, including break-even analysis and net present value capital budgeting model
5 Excel spreadsheet examples
Concepts of elastic demand, optimal pricing, and price discrimination.

Why wait? Take the course now; it is worth it.

Who this course is for:

Students interested in marketing and business education.
Entrepreneurs, business developers, and start-up owners.
All levels of business analysts

Price Analytics

What you'll learn

Explore related topics

Course content

Pricing Techniques14 lectures • 15min

Pricing Assessment10 lectures • 17min

Profitable Pricing6 lectures • 6min

Price Discrimination1 lecture • 4min

Requirements

Description

Who this course is for: