Pricing Excellence is Found at the Intersection of Business and Academia
Pricing is the process of setting the value of a product. It sounds incredibly simple, doesn’t it? The reality is, however, that it is a complex task and, therefore, needs a competent and skilled professional to oversee it.
Good pricing strategies often require many years of experience in marketing, economics and finance. Any company could just apply reasonable prices to their products based on guesswork. But that is a fast way to lose profits, customers or both. Therefore, Pricefx is proud to be sponsoring an event at the University of Rochester, for the Simon School of Business Pricing program. During the event, students will have access to Pricefx’s state-of-the-art pricing software and the opportunity to learn why pricing is important, and how to get involved.
What is Pricing?
As the advertising industry gave way to the far friendlier alternative, ‘marketing’, pricing has become far more important. Initially, marketing was not considered significant or recognized as a discipline. It was treated as a subsection of economics called ‘applied economics’. While it is hard to date the moment marketing became a common practice, we do know when universities began to teach the subject. In 1902 at the University of Michigan, the first marketing course was offered. Following this, many other universities began to teach marketing as a discipline, leading up to the modern-day where the marketing industry is valued at $1.2 trillion dollars.
How do Pricing and Business Correlate?
Pricing in itself is an element of marketing. In its most basic form, pricing is setting the price for a company’s products or services. If the price is too high, customers won’t pay. And ironically, low pricing can be a problem too. Any pricing mistake will lead to a loss in revenue and profits, driving business into closure within no time. Put bluntly, the most simple costing mistakes can cost a business big time! And it’s not just bad for your bottom line. Poor pricing affects your reputation. Price a product too high and you’re known as unaffordable and too elite, cutting away a huge chunk of customers who may have paid just a few dollars less. Set your prices too low and your products become known as cheap, flimsy or short-lived (although this is not always necessarily a bad thing, as we will see later). The main point is, customers are increasingly wary about who they trust, so it’s important to know who you are selling to and what their perfect price might be.
Pricing Strategies at the 2020 Simon Pricing Club Case Competition
Effective pricing involves creating strategies based on how you want your product to appear within the market. It is perfectly acceptable to price your products high or low, as long as you have a good, robust strategy for doing so. One example of this is EDLP (every day low pricing) which involves low quality or disposable products being sold at low prices consistently. Whilst setting a standard of low-quality cheap products can be a bad idea, it can be a real moneymaker when done properly. This is how brands such as Walmart and dollar stores have found great success in this space. Another common pricing strategy that you may know is the 99 price point. This involves setting a price $0.99 higher in order to make an additional dollar per sale. Psychological studies continuously show that customers view $19.99 as $19.00, rather than rounding up to $20.00.
But, you can’t just apply these pricing strategies randomly. You must consider the market as a whole, such as the deals and sales that are available, as well as the value of your product compared to the same or other similar items. This is why pricing experts typically look to advanced software that removes the guesstimates from the equation. Pricefx is capable of analyzing massive amounts of data at any given time and setting prices for thousands of products. Before this, companies would have to set the price for each product manually and perform their own research.
Unlike marketing, which has been practiced for over a hundred years, pricing is a relatively new profession. It means that you could enter a lucrative and challenging profession, years before it is picked up by the competition.
Pricefx Event at Simon Business School at the University of Rochester
As pricing itself is such a complex and multi-layered discipline, it is vital that students such as yourselves begin studying it at university. For this reason, we are sponsoring this pricing event at the University of Rochester, Simon School of Business Pricing program. During the event, students will be separated into teams of four to five. Within your teams, you will be tasked with a number of real-world business problems. You must solve them using a mixture of pricing, strategy and analytics. As stated, each team will have access to Pricefx’s pricing software to help structure your solutions.
Following several rounds, four to five teams will be shortlisted for the final round. During which, the winning teams can compete for prize money.
The event will be an entertaining and challenging look into the industry of pricing and what it has to offer you. Access to Pricefx’s bespoke pricing software will allow you to see the tools at the disposal of industry leaders in pricing. Gain a competitive edge in pricing by enrolling for our pricing event today.FYI