The future of pricing: Outside-in

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The future of pricing: Outside-in

USA|Journal of Revenue and Pricing Management|July 2011

Most industries are not as advanced in pricing as the travel and transportation industries. In fact, many companies price their products or services using some form of cost-plus pricing. In this article, we discuss how we think that the champions of tomorrow will move from inside-out (cost-plus) pricing to outside-in (value-based) pricing. The challenge with this transition is that you need to understand your customers preferences and willingness to pay and represent these in a demand function that can be used to optimize the prices. This article lays out a framework for how this can be accomplished.

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