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Cost and Economics in Pricing Strategy (Coursera)

How much should you charge for your products and services? Traditionally, businesses have answered this question based on the cost to produce or provide their goods and services. This course shows you the economic factors behind pricing based on cost and the pros and cons of a cost-based pricing approach.

Led by Darden faculty and Boston Consulting Group global pricing experts, the course provides the practical and research-based models and methods you need to set prices that maximize your profits.

By the end of this course, you’ll be able to:

–Apply knowledge of basic economics to make better pricing decisions

–Recognize opportunities for price discrimination—selling the same product at different prices to different buyers—and recommend strategies to maximize sales and profits

–Calculate three types of price elasticities to determine the impact of price on demand

–Analyze and apply different pricing models

-Cost-plus pricing

-Marginal cost-plus pricing

-Peak-load pricing

-Index-based pricing

–Evaluate the impact of channel intermediaries and customer lifetime value on pricing

Who is this class for: This course is designed for business professionals and those aspiring to a career in marketing.

Course 1 of 4 in the Pricing Strategy Optimization Specialization.

Syllabus

WEEK 1

Pricing Fundamentals

Welcome to the first week of Cost and Economics in Pricing Strategy course! We’ll begin our study of pricing by looking at some basic economic principles relevant to pricing, such as cost and cost variations and what that implies about the supply curve. Then we’ll take a closer look at one pricing mechanism: auctions. You will never look at eBay the same!

Graded: Week 1 Pricing Fundamentals Quiz

WEEK 2

Price Discrimination

This week we’ll tackle three areas that will help you improve the effectiveness of your pricing strategy. First, we’ll take a look at price discrimination and how to set prices for different customer segments to maximize profits. You’ll learn about the price and margin waterfall and how creating one for your business can help identify “leaks” that you can prevent. Then we’ll examine volume-based pricing, or pricing differently for different volumes to encourage consumption, of a consumer product: Heinz Ketchup. When we’re done, you’ll be very aware of the impact package size has on your own consumption–and how to use this knowledge to price products.

Graded: Quiz on the Heinz Case

Graded: Week 2 Quiz on Price Discrimination

WEEK 3

Common Pricing Metrics: Elasticities

This week we’ll dive deep into the world of demand modeling. We’ll start with a brief overview of regressions–what they are, why they’re useful and how to calculate them using Excel. Then you’ll get a chance to use regressions as you learn about three types of elasticities–relationships between demand and price or other factors–and the drivers of these elasticities. We’ll finish with a price optimization based on demand models–a truly useful method for pricing based on economic factors. By the end of this week, you’ll be able to impress your colleagues and friends with your knowledge of mathematical models and how to use them to inform your pricing strategy!

Graded: Week 3 Quiz on Price Elasticities

WEEK 4

Channel and Direct-to-Consumer Pricing

Welcome to our final week together in this course! We’ll finish by discussing key concepts related to channel pricing–or pricing through the supply chain. You’ll learn about double-marginalization, time value of money, and customer lifetime value (CLV)–not only what they are, but how to use them to improve pricing decisions. Then we’ll show you three different pricing techniques that you can use to improve direct-to-consumer pricing. You’ll finish with a real-world case analysis of Retail Relay, an online grocery ordering and delivery service. You’ll be able to recommend a viable approach to their pricing dilemma based on knowledge from this course. Enjoy!

Graded: Retail Relay Case Quiz

Graded: Week 4 Quiz on Channel and Direct-to-Consumer Pricing

Graded: Cost-based Pricing

ENROLL IN COURSE