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Customer Value in Pricing Strategy (Coursera)

The traditional approach to pricing based on costs works to pay the bills, but it leaves revenue on the table. You can, in fact, price your products in a way that increases sales–if you know what your customers are willing to pay and can leverage psychology to create better deal and discount plans. In this course, we’ll show you how to price a product based on how your customers value it and the psychology behind their purchase decisions.

Led by Darden faculty and Boston Consulting Group global pricing experts, this course provides an in-depth understanding of value-based pricing and how to use it to capture more revenue.

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

— Apply knowledge of customer value to price products

— Leverage core value-based pricing techniques to inform pricing decisions

— Measure customer willingness to pay using models (surveys, conjoint analysis, other data)

— Use knowledge of consumer psychology to set prices beneficial to both consumers and sellers

Course 2 of 4 in the Pricing Strategy Optimization Specialization.



Understanding Customer Value

Welcome to Week 1! We kick off the week with an overview of the course so that you’ll know what to expect with an optional review of the specialization and three pricing lenses (watch these if you want a refresher). Then we’ll dive into the content! This week, you’ll learn about customer value–what it is and its relevance to pricing. You’ll see how consumers make decisions–and why knowing consumers’ willingness to pay is so important when setting a product’s price. Next, we’ll take a look at customer value in developing economies and how and why companies succeed (or not!) with value-based pricing in these markets. You’ll finish the week with a solid understanding of “customer value” and how that impacts pricing strategy.

Graded: Week 1 Understanding Customer Value Quiz


Implementing Value-based Pricing

Now that you have an understanding of customer value, let’s dive into value-based pricing in greater depth. This week, we’ll show you how to price to the demand curve using three tools: the price piano, the price ladder, and incentive curves. We’ll take a look at customer value drivers in a B2B context and walk through a process to price a new product. Then Ron and Thomas will show you how price elasticity plays into value-based pricing. Implementing value-based pricing requires detailed analysis. Let’s get started!

Graded: Week 2 Implementing Value-based Pricing Quiz


Measuring Customer Preferences

As you learned in Week 1, understanding customer willingness to pay (WTP) is critical for effective pricing. This week, we’ll show you two ways to measure willingness to pay: surveys and conjoint analysis. You’ll see how one company, Adios Junk Mail, used surveys to better understand WTP. Conjoint is a terrific tool, and we’ll walk you through how it’s used to determine product preferences and prices. You’ll finish the week with a solid understanding of how to measure customer preferences and use this information in your pricing strategy.

Graded: Adios Junk Mail: Case Quiz

Graded: Week 3 Measuring Customer Preferences Quiz


Considering the Human Nature of Customers

Last week you considered pricing using a rational utility model. But humans are not always rational beings–and your pricing strategy needs to consider other behavioral drivers. We’ll look at the psychology behind consumer purchase decisions and the mental accounting that impacts those decisions. Next we’ll consider consumer price perceptions and ways to frame prices and create better deals and discount plans that work for both the consumer and the seller. Then, we’ll take a look at two real-world cases, the Portland Trailblazers and Fidelity Investments so that you can practice using tools from throughout the course in a real-world case. You’ll finish the course with fresh insights into value-based pricing and its applications.

Graded: Value-based Pricing

Graded: Week 4 Consumer Psychology Quiz