• Identify and explain the concepts and theories of pricing
• Apply theories and models to own organization or other chosen empirical or conceptual context
• Reflect upon theories and models’ relevance and applicability

Pricing is a main driver of firms’ profitability and of successful business development. Pricing however in many firms has been somewhat neglected and focused on correcting historical errors and meeting short term financial goals. Such an approach does not leverage the full potential of pricing.  

This course will focus on how firms can use pricing as a strategic lever to increase a focus on value generation. In order to accomplish this, three challenges need to be handled. First, firms are challenged by the use of market, competitor, and cost information. Gauging customers’ willingness to pay is subject to high uncertainty, and fairness considerations may impact outcomes of pricing decisions. Market prices may be distorted by discounting policies, and cost information is often imprecise. Second, firms face the challenge of coordinating pricing decisions. Functions such as finance, marketing, sales, production and R&D have knowledge and decision making power in relation to pricing. Therefore, firms need to coordinate knowledge from different parts of the organization to price effectively, something which is particularly important when implementing a value driven approach. Finally the different entities affecting pricing decisions often have different interests which lead to margin leakage, excessive discounting and problems with perceived fairness of price policies. This generates a control problem.  

The analysis of these challenges and how firms may deal with them form the foundation of this course. The three problems are analyzed in an interdisciplinary problem solving approach, using market, economic, and organizational perspectives. In the course, participants will develop insight into the use of tools and models for dealing with pricing challenges and will analyze how firms may develop pricing as a strategic, valuefocused process.  

The course will be delivered in the following manner. Each session starts out with discussing a particular challenge as well as models, theories and techniques for analyzing and solving them. Following this, the session will move on to more detailed work on challenges and solutions through simulations, exercises, casework, and workshops.   

During the first day, participants are asked to present an answer to the following question: How does your firm arrive at the invoice price? The last day will provide a forum for discussing the synopsis and developing perspectives on your organization’s pricing challenges.