Chapter 1

Theory of Pricing Analytics*

How do managers in a firm decide on the prices to charge for the products or services they sell? For some firms, the pricing decision is made at the top level of the management team with little flexibility for the sales force, marketing team, or supply chain partners (distributors or retailers) to make adjustments. Apple’s fixed pricing for its popular iPhone and iPad products is a good example of this practice. For other firms, it may appear to the customer that pricing is left entirely up to the individual sales person. This happens frequently in the business-to-business (B2B) market, such as the pricing for a major software implementation by a software vendor or consulting company. The price quoted ...

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