Jim Saunders recently wrote an interesting article published in the 2010 Journal of Professional Pricing from the Professional Pricing Society. The introduction sums it best.
“When it comes to price optimization, many in the industry have come to conclude that in order to optimize prices, you should figure out the demand curve, link it to the cost function, and find the point where marginal revenue equals marginal costs. However, this approach only yields a short-term optimization that doesn’t account for the longer-term impact on customers, or for potential competitive reactions. When the goal is to achieve long-term profit and growth, a different approach is required, as this article explains.”
To read the full article you can click here
Jim Saunders leads the Pricing Management Practice at Pricing Solutions. He can be reached at firstname.lastname@example.org