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Pricing Products Partly Based on Ebert & Griffin Chapter 11

Pricing Products Partly Based on Ebert & Griffin Chapter 11. For My Friends in BSAD 101 By Thomas Hilton. Key Topics. Pricing objectives Price-setting tools Pricing strategies and tactics Cost-Justifying Information Systems. Pricing to Meet Business Objectives.

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Pricing Products Partly Based on Ebert & Griffin Chapter 11

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  1. Pricing ProductsPartly Based on Ebert & Griffin Chapter 11 For My Friends in BSAD 101 By Thomas Hilton

  2. Key Topics • Pricing objectives • Price-setting tools • Pricing strategies and tactics • Cost-Justifying Information Systems

  3. Pricing to Meet Business Objectives • Profit maximizing objectives • Market share objectives

  4. Price Setting Tools Cost Oriented Pricing Breakeven Analysis

  5. Breakeven Analysis Figure 11–1

  6. Pricing Strategies • Pricing existing products • Pricing new products • Price skimming • Penetration pricing • Pricing e-commerce products • Dynamic vs. fixed

  7. Pricing Tactics • Price lining • Psychological pricing • Odd-even pricing • Discounts

  8. Justifying I.S. Projects • Why Develop Information Systems • Cost-Justification • Non-cost Justification

  9. Why Develop Information Systems? • Information is the intended output • Data is the main input • Is there a difference? • There had better be!

  10. Data: Objective Measures of Traits of Real-World Objects • Objective • Not subjective • Replicable • Measures • Values • Quantitative • Qualitative • Traits • Characteristics • Attributes • Real-World Objects • Entities or Classes • Tangible • Intangible

  11. Information: Data Aggregated and Placed in a Useful Context • Context • Titles • Labels • Rows • Columns • Usefulness • Decision-Making • Judged by User • Data • see prior • Aggregation • Groups • Calculations • Manipulations

  12. Information Quality Six Traits • Accuracy • Timeliness • Relevance • Verifiability • Accessibility • Security

  13. Cost-Justification • “Is the system worth its cost?” • Compare “worth” with “cost” • Various Methods • ROI • Present Value • Cost-Benefit Analysis

  14. Cost-Benefit Analysis Conceptually Simple • Quantify all Costs • Quantify all Benefits • Divide Costs by Benefits • If C/B Ratio < 1, then Proceed

  15. Cost-Benefit Analysis Complex in Practice • System Lifespan • Tangibles vs. Intangibles • Future Orientation

  16. Costs People Facilities Supplies Data Hardware Software Training Procedures Opportunities Confusion

  17. Benefits • Cost Shifting • Inventory • Labor • Debt • Profit Generation • Product • Service • Cost Elimination • Worker • Process • Carrying Cost • Cost Reduction • Efficiency • Productivity • Maintenance

  18. Cost-Benefit Analysis Table

  19. An Example Network Design Proposal

  20. Non-Cost Justifications • Cost-benefit analysis is not iron-clad • Often, detractors can discredit it • Therefore, it must be accompanied by non-cost justifications • Organizational culture • Strategic direction • Potential competitive advantage • Environmental Imperatives • Top Management Support

  21. Review • Putting a Price on Information involves • Objectives: Profit? Market share? • Strategies: Existing? New? E-Commerce? • Tactics: Price-lining? Psychological? Discounts?

  22. Now You Do It! • Cost-justify an information system of your choice using the CBA table in this presentation • Email it to me within 10 days

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