Digital Pricing: A Guide to Strategic Pricing for the Digital Economy

Length: 353 pages
Edition: 1
Language: English
Publisher: Springer
Publication Date: 2023-03-04
ISBN-10: 3031245903
ISBN-13: 9783031245909
Sales Rank: #7001994 (See Top 100 Books)

This is one of the first books to combine the current megatrend of digitalization and pricing as the most effective lever for increasing and sustaining profits. The book presents the basics of digital pricing as well as modeling methods and implementation examples. This structure helps in tackling the latest developments and challenges due to digitalization. Readers will gain a detailed insight into using innovative revenue and price models to generate a sustainable competitive advantage for their companies. The author uses his cross-industry experience to draw on several examples of innovative digital pricing approaches which can be applied in industrial sectors such as automotive, industrial goods and machinery, as well as service sectors like telecommunications, transportation and tourism.

Aim of this book
Contents
About the Author
List of Figures
1: Basics of Price Management
	1.1 Digitization and Pricing
		The scope of the pricing logic in this book
	1.2 Price as a Profit Driver
		Case study 1: Price effect
	1.3 Specific Characteristics of the Price
	1.4 The Price-Volume Function as an Indicator of Customer Response
		Practical tip
	1.5 Market Dynamics and Price Elasticity
		Practical tip
	1.6 Price Actions, Elasticities, and Profit Effects
		As an interim conclusion
		Case study 2: Price effect
		Practical example: Price effect
	1.7 Practical Examples: Market Dynamics in Modern Industries
		Case study 1: High demand effect of price cuts
		Case study 2: Positive profit effect of price premia
		Case study 3: Increasing price elasticity through digitization and price transparency
		Case Study 4: Increasing price acceptance through technical advantage and innovation
	References
2: Characteristics of Digital Pricing
	2.1 Characteristics of Digital Offerings in Terms of Pricing
	2.2 General Conditions and Price-Related Characteristics of the Internet
	2.3 Stages of Development of Digitization
	2.4 Digitization and Competitive Dynamics
	References
3: Business Models
	3.1 Business Models as the Starting Point for Digital Pricing
		Practical Example: Disney Theme Parks
	3.2 Digital Business Models
		Case Study Music Streaming: Spotify
		Practical Examples: Marketplaces and Platforms
		Example: Cell Phones
	3.3 Value Creation Through Data and Data-Driven Business Models
		Practical Example 1: Data-Driven Business Models
		Practical Example 2: Data-Driven Business Models
		Practical Example 3: Data-Driven Business Models
	3.4 The Three-Level Model of Digital Pricing
		Practical Example: Modern Monetization Models
		Practical example 1: Hitachi (B2B)
		Practical example 2: AVE (B2C)
		Practical example 3: Amazon (B2C)
		Practical example 4: Google (B2C)
		Practical Example: Amazon (B2C)
	3.5 Method Tip: Business Model Map
		Case Study: Resources as a Starting Point for the Business Model Definition
		Project Outline for the Business Model Map
	References
4: Revenue Models
	4.1 Delineation: Revenue Models
		Practical Example 1: Google Waymo
		Practical Example 2: Automobile Manufacturer
		Practical Example 3: Amazon
		Practical Example 4: Google
		Case Study Music Streaming: Spotify
	4.2 Services and Revenue Sources on the Internet
		Case Study: Revenue Sources for Smartphones
		Case Study: Revenue Sources for Games
		Case Study: Revenue Sources for Films
		Case Study: Apple Revenue Sources
	4.3 Overview of Selected Revenue Models
		Case Study Music Streaming: Spotify
	References
5: Pricing Process Part 1: Analysis
	5.1 Introduction to the Pricing Process
	5.2 Determinants of Pricing
	5.3 Costs
		Case Study MediaMarktSaturn
	5.4 Competition
	5.5 Customers
	References
6: Pricing Process Part 2: Strategy
	6.1 From Corporate and Competitive Strategy to Pricing Strategy
	6.2 Dimensions of the Pricing Strategy
	6.3 Pricing Targets
		Method Tip: Target Prioritization
		Case Studies: Amazon ebooks and Apple iPhone
	6.4 Competitive Strategies
		Case Studies
		Apple Case Study
	6.5 Strategic Segmentation and Positioning
		Case Studies
		Implementation Tip
	6.6 Competitive Advantage Matrix
		Case Study Praktiker
		Case Study Loewe
	6.7 Strategic Behavior in Competition
		Case Study Retail Germany
	References
7: Pricing Process Part 3: Structure (3a: Price Differentiation)
	7.1 Basics of Price Differentiation
	7.2 Variants of Price Differentiation
		7.2.1 Price Differentiation According to Market Segments
			Project Outline Pedelecs
			Case Study: Price Differentiation for Advertising Customers on the Internet
			Case Study Media-Saturn Retail Group
			Case Study Boss
		7.2.2 Quantity-Based Price Differentiation
			Case Study Quantity-Based Price Differentiation
		7.2.3 Price Differentiation According to Products
			7.2.3.1 Price Bundling
				Case Study: Microsoft Office Package
				Case Study ``Customized Bundling´´
				Case Studies Product Type
				Method Tip
			7.2.3.2 Performance-Related Price Differentiation
				Case Study Netflix
	7.3 Prerequisites for Price Differentiation Concepts
	References
8: Pricing Process Part 3: Structure (3b: Price Models)
	8.1 Delimitation and Definition: Price Models
	8.2 The Six Pillars of a Price Model
		Case Studies
		Case Study Aladoo
	8.3 Reference Bases in Detail
		8.3.1 Usage-Independent Reference Bases
			Case Study Telecommunications
		8.3.2 Usage-Dependent Reference Bases
		8.3.3 Value-Dependent Reference Bases
			Case Studies: Outcome-Based Price Models (Cf. Figure 8.5)
	8.4 Price Metrics in Detail
	8.5 Competitive Strategies and Price Models
	8.6 Methodical Innovation: Concept for Optimizing Price Models
	8.7 Success Criteria of Price Models
		Example 1: Software (SAP)
		Example 2: DVD Rental (Netflix)
		Example 3: Occupational Disability Insurance (WWK)
	References
9: Pricing Process Part 3: Structure (3c: Price Optimization)
	9.1 Methods for Determining the Optimum Price
		9.1.1 Observation
			9.1.1.1 Price Experiments
				Case Study Offer Configurator
			9.1.1.2 Econometric Analysis of Market Data
			9.1.1.3 Voice of Consumer Analytics (``Social Listening´´)
			9.1.1.4 A/B Testing
			9.1.1.5 Online Auctions
		9.1.2 Survey
			9.1.2.1 Direct Price Query
			9.1.2.2 Open Line Pricing
			9.1.2.3 Gabor-Granger Method
			9.1.2.4 Price-Sensitivity-Meter
			9.1.2.5 Conjoint Measurement
				Excursus: Comparison of Methods (Conjoint Measurement Vs. Price Experiments)
		9.1.3 Workshops
			9.1.3.1 Focus Group Interviews
			9.1.3.2 Expert Estimation
		9.1.4 Excursus: Impact of Artificial Intelligence on Price Optimization Methods
	9.2 Calculation of the Profit-Optimal Price
		Case Study: Automatic Price Optimization Via a Repricing Tool
	9.3 Simulation Analyses for Product and Price Optimization
	9.4 Method Innovation: Value-Price Optimization
		9.4.1 Value-Price Optimization: Philosophy and Fundamentals
		9.4.2 Methodological Steps of Value-Price Optimization at a Glance
			Practical Tip
			Method Tip: Analysis of Value Drivers
		9.4.3 Summary of the Value Driver Analysis
	9.5 Pricing Strategies for New Products
		Case Studies Penetration Strategy
		Case Studies Skimming Strategy
	References
10: Pricing Process Part 3: Structure (3d: Portfolio Pricing)
	10.1 Challenges of Portfolio Pricing
		Apple Case Study
		Practical Example: Long-tail Business Model and Price Structure
	10.2 Methodical Derivation of Price Structures
	10.3 Project Outline: Product Line Pricing for Information Goods
	10.4 Method Innovation: Analysis and Steering of Price Elasticity
	10.5 Implementation Tip: Price-Related Measures to Influence Price Elasticity
	10.6 Dynamic Pricing
		10.6.1 Definition of Dynamic Pricing
		10.6.2 History and Development
			Case Study Gas Stations
		10.6.3 Delineation: Dynamic Pricing Versus Revenue Management
			Case Study Air Traffic
		10.6.4 Requirements and Fields of Application
		10.6.5 Objective of Dynamic Pricing
		10.6.6 Technical Variants and Forms of Dynamic Pricing
		10.6.7 Personalized Dynamic Pricing
		10.6.8 Dynamic Pricing Case Studies
		10.6.9 Risk Factors in Dynamic Pricing
	References
11: Pricing Process Part 4: Implementation
	11.1 Introduction: Condition System and Sales Management
	11.2 Basics of the Condition System
	11.3 Performance-Oriented Condition Systems
	11.4 Target Price Systems and Peer Pricing
	11.5 Price Enforcement
		11.5.1 Value Selling
		11.5.2 Total Cost of Ownership Approach
		11.5.3 Total Value of Ownership Bonus System
	11.6 E-Bidding
	11.7 Incentive System
	11.8 Tactical Pricing
	References
12: Pricing Process Part 5: Monitoring
	12.1 Price Monitoring: Challenges
	12.2 Pricing Cockpit
		12.2.1 Financial Monitoring
		12.2.2 Monitoring Market Effects
			Case Study of User-oriented Monitoring: Amazon and Netflix
			Case Studies: Target Prioritization in Selected Industries
			Method Tip: Integration of Financial and Market Objectives
			Case Study Pricing Power: Sea Freight
		12.2.3 Monitoring Pricing Excellence
	References
13: Pricing Process and Pricing Psychology
	13.1 Focus Topic Pricing Process and Pricing Psychology: Introduction
	13.2 Price Psychology and Structure (1): Mental Accounting
	13.3 Price Psychology and Structure (2): Price Level Effect
	13.4 Price Psychology and Structure (3): Anchoring
	13.5 Price Psychology and Structure (4): Value Effect
	13.6 Price Psychology and Structure (5): Price Threshold Effect
	13.7 Price Psychology and Structure (6): Compromise Effect
	13.8 Price Psychology and Structure (7): Decoy Effect
	13.9 Price Psychology and Structure (8): Price Figure Communication
	13.10 Price Psychology and Implementation (1): Tiered Discounts
	13.11 Price Psychology and Implementation (2): Endowment Effect
	13.12 Price Psychology and Implementation (3): Loss Aversion
	References