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Promoting demand-based pricing

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Journal of Revenue and Pricing Management Aims and scope

Abstract

Applied economists have been trying to sell businesses on the value of demand-based pricing for many years. Their arguments promoting demand-based pricing have not been particularly persuasive and cost-based pricing continues to be a dominant price-setting method. This paper suggests four changes that may lead more firms to use demand principles when they set prices. Applied economists should acknowledge the benefits of other price-setting processes, shift their focus from profit-optimization to profit-improvement opportunities (e.g., increasing price so it is closer to the demand function), develop pricing heuristics that better meet firm needs, and add new pricing topics to classroom discussions.

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    Ronald B. Larson

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Larson, R.B. Promoting demand-based pricing. J Revenue Pricing Manag 18, 42–51 (2019). https://doi.org/10.1057/s41272-017-0126-9

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  • DOI: https://doi.org/10.1057/s41272-017-0126-9

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