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Value-based pricing is pricing according to the value of the benefits delivered to customers in comparison to the competing alternatives. The pricing industry has broadly accepted value-based pricing as superior to alternative paradigms. But how do executives functionally arrive at prices that are aligned with the principals of value-based pricing? What techniques do they use? What are the trade-offs between the competing methodologies? What process steps are executed to deploy these methods? And how can these methodologies be used to engage positive collaborations with product managers, salespeople, finance departments, and marketing communications professionals?
In How to Price, Tim J. Smith, PhD clarifies the three industry-dominant pricing methodologies in practice today and their relationship to value-based pricing: exchange value to customer, conjoint analysis, and economic price optimization. Each of these methodologies is an industry-proven, academically accepted best practice for addressing pricing challenges. Each is superior in some cases but inferior in others. Each uses market research data to understand customer choices but the type and sources of the data differ between them greatly.
The objective of this course is to inform executives of the dominant pricing methodologies in the market and enable them to select the right approach for whatever price-setting challenge they face.
Tim Smith, PhD is the Managing Principal at Wiglaf Pricing, Adjunct Professor of Marketing and Economics at DePaul University, and Academic Advisor to the PPS Certified Pricing Professional program. Smith focuses on the use of quantitative and qualitative research to enable firms to drive profitable top-line revenue. He began his career as a research scientist in quantum mechanics before his interest in transferring technological advances to societal implementations led to pursuits in business strategy.
Smith holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.