Pricing and Costing

Introductory Video to Pricing and Costing

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Course overview

If your role in sales, marketing or product management involves setting or accepting prices, you'll want to be certain that your mind is open to consideration of alternative approaches for deciding what's best. To set pricing you'll want to increase the perceived value of the product's benefits to the customer. To accept deviations from list pricing you'll want to really know and understand the incremental costs within your specific organization.

The course is designed to help you think about the alternatives you have in setting prices. It is intended to help you determine what makes an "optimum" price, and if one exists for your particular circumstances. The course is also intended to give you insight into the differences between the "standard cost" often referred to in industry and the real costs of doing incremental business. To successfully manage a business, you must understand where your costs actually come from.

The course includes an exercise involving a real-world set of decisions about accepting orders at well below list price. It works through real considerations ranging from the real capacity of your organization to the impact of your decision on the share price of your stock. It is intended to stretch your thinking horizons and yet give you techniques you might apply during your next workday.

Who should participate

This course is designed for Sales, marketing or product management professionals who wish to add to their ability to be effective by bringing business discipline to pricing decisions. It is also suitable for research, development, engineering and technical support professionals who want to broaden their understanding of business so as to bring more added value to the activities of their firm.

What you will learn

• Decide what sort of arguments you'll make for pricing approval
• Decide what is an optimum result of pricing
• Deal with market-based "commodity" pricing
• Use differentiation
• Build perceived value in a product
• Use dollar-based benefit analysis as the basis of pricing
• Use unbundling to build value
• Assess alternatives and zero in on a price
• Understand standard costs and their place in an organization
• Use incremental costing as a basis for decision making

Course outline

1. Pricing as an art
   • Considerations about the decision maker

2. Market-based or commodity pricing

3. Unbundling to build perceived value
   • What's part of your equipment sale?
   • What's part of your materials sale?

4. Summary principles

5. Understanding what "optimum" means
   • Finding an optimum for maximizing sales volume
   • Finding an optimum for maximizing margin

6. Value-based pricing
   • Putting a value on benefits
   • How much is a dollar worth? An exercise in value
   • Perceived value

7. Incremental costing
   • Exercise in determining true incremental costs
   • Using incremental costs as a basis for action