Is It Time to Rethink Your Pricing Strategy? Harvard Case Solution & Analysis

In many businesses, pricing receives surprisingly little attention. Following work that included a study of pricing at 15 medium and small -sized firms, the authors conclude that many companies can improve their pricing capabilities -and thus their profitableness -through time by taking a disciplined approach. The authors identify two essential elements of pricing -price orientation and cost -and five degrees of pricing capabilities. They discover the businesses they analyzed that reached better pricing had top supervisors who championed the development of pricing abilities. While rivalry, costs and cost empathy within a marketplace influence the parameters within which businesses set prices, outstanding pricing is typically based on ability, the authors maintain.

The authors claim that according to their research their pricing abilities can be improved by many companies by cultivating their understanding of the value they bring their customers. But implementing customer value-based pricing is difficult, the authors caution. They find that developing and implementing a sophisticated, customer value-based pricing program is a multiyear endeavor that demands a high degree of executive attention and requires considerable changes in procedures and thinking within the organization.

PUBLICATION DATE: July 01, 2012 PRODUCT #: SMR423-HCB-ENG

This is just an excerpt. This case is about FINANCE & ACCOUNTING

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