Book contents
- Frontmatter
- Contents
- Preface
- 1 Introduction to Pricing Techniques
- 2 Demand and Cost
- 3 Basic Pricing Techniques
- 4 Bundling and Tying
- 5 Multipart Tariff
- 6 Peak-load Pricing
- 7 Advance Booking
- 8 Refund Strategies
- 9 Overbooking
- 10 Quality, Loyalty, Auctions, and Advertising
- 11 Tariff-choice Biases and Warranties
- 12 Instructor and Solution Manual
- References
- Index
3 - Basic Pricing Techniques
Published online by Cambridge University Press: 06 July 2010
- Frontmatter
- Contents
- Preface
- 1 Introduction to Pricing Techniques
- 2 Demand and Cost
- 3 Basic Pricing Techniques
- 4 Bundling and Tying
- 5 Multipart Tariff
- 6 Peak-load Pricing
- 7 Advance Booking
- 8 Refund Strategies
- 9 Overbooking
- 10 Quality, Loyalty, Auctions, and Advertising
- 11 Tariff-choice Biases and Warranties
- 12 Instructor and Solution Manual
- References
- Index
Summary
This chapter introduces basic pricing techniques. By basic we refer to techniques that are limited to simple one-time purchases of a single good only. That is, the simple techniques studied in this chapter do not address more sophisticated markets in which products and services are differentiated by the time of delivery, the length of the booking period, quantity discounts (bundling), and services that are tied with other products and services. In fact, some of basic pricing techniques described in this chapter can also be found in most intermediate college microeconomics textbooks. Clearly, readers must first understand these basic techniques before proceeding to more sophisticated ones analyzed in later chapters.
The basic question that must be addressed before managers select a price is whether competition with other firms prevails, or whether the firm can disregard any potential and existing competition and act as a single-seller monopoly. Most of the algorithms in this book are designed for a single seller simply because the introduction of competition diverts attention from learning the logic behind proper yield management. Clearly, prices should be lowered when a firm observes competition from rival firms. In view of this discussion, we divide this chapter into the analysis of basic monopoly pricing and only then proceed to analyze pricing under competition. The analysis of competition will be brief because there is a large number of market structures that must be considered.
- Type
- Chapter
- Information
- How to PriceA Guide to Pricing Techniques and Yield Management, pp. 59 - 114Publisher: Cambridge University PressPrint publication year: 2008