A Data Science Central Community
Unsollicited email receiced today, but maybe this one is worth reading.
A good pricing strategy would be the one which could balance between the price floor (the price below which the organization ends up in losses) and the price ceiling (the price beyond which the organization experiences a no demand situation).
Pricing is, in essence, a risk management strategy - pricing research. Pricing research offers a variety of quantitative methods to measure the 'right' price.
Value-based pricing is a business strategy which sets selling prices based on the perceived value to the customer, rather than the actual cost of the product, the market price, competitors' prices, or the historical price. Practically speaking, the goal is to align the money spent with the value perceived. For example, the number of users, lifetime spending, number of transactions, value of transaction, return-on-investment, cost saving, revenue; the list can continue.
Multivariate Pricing, published in ESOMAR'sResearch World Magazine, explains more sophisticated approaches to pricing, such as Discrete Choice Modeling, Maximum Difference price simulations, and Monte Carlo demand forecasting to maximize revenue at given price points.
We will be presenting at the 2014 MRA Insights & Strategies Conference. I invite you to attend my session, Social Network Analysis Tools and Practical Applications.
Please follow us on Twitter, @statmaven, for updates on statistical methods and updates on the marketing research, branding, and predictive analytics industries.
I am looking forward to working with you soon.