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Session
20:
Pricing and Economic Analysis (I)
Alternative Perspectives on Pricing
Product is only one half of the value proposition equation. In assessing the value
proposition,
the technology adopter must determine whether the value delivered exceeds all the costs
incurred. We have seen that costs come from two sources: the external costs, those
associated
with acquiring the technology (and all required supporting services) and the internal
costs,
those associated with converting the organization over to the technology, with all the
attendant
potential for disruption of ongoing operations and other “resistance points.”
But the technology
company wishes to survive, more than that, to return a profit to those who took
substantial
investment risks. Pricing is the means whereby, ideally, the objectives of both buyer and
seller are accomplished, whereby both achieve value in excess of cost. This two-part
lecture
on pricing addresses this fundamental element of the value equation.
Readings: ® = required; scan = read
introduction and conclusions; scan inside pages;
(o) = optional;  = Adobe Acrobat File
Scan:
-
Davidow, William, Marketing High Technology, New York: Free Press,
1986, Chapter 7 ("Price on
Value But Charge What the Market Will Bear"), 102-117.
 Carlton, Jim, "Marketing
Plays a Bigger Role in Distinguishing PCs," Wall Street Journal, Oct. 16,
1995, B2- Cox, Michael, "The
Low Cost of Living," Wall Street Journal, Apr. 9, 1998, A22.
Lecture Notes:
Pricing Strategy (I):
Alternative Perspectives on Pricing
Assignment 3 (MRS Technology Case) -
Self-Assessments Due (post to Prometheus Assignment 3 Folder)
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