Pricing Process Part 3: Structure (3d: Portfolio Pricing)

Given the range of their assortment and the diversity of input data, many companies rely on simplified rules for making pricing decisions. Optimizations of the price architecture are made for the most important customer segments, product variants, regions, and channels. All remaining price points are derived via a standardized process. From an efficiency point of view, pricing must concentrate on the segments and product groups that are significant both strategically and from a profit point of view. These success-critical price points define the brand images of companies and determine their long-term survival. In many other cases—in the case of slight product modifications, less relevant product elements, etc.—it is not possible to invest a great deal of time in each individual pricing decision. In all these constellations, companies need precisely defined processes that lead to a successful “value extraction.” These processes are more or less standardized depending on the industry. Dynamic pricing is a special field of portfolio pricing. Dynamic pricing adjusts the prices of products, services, and information goods to the current market situation according to defined time cycles. The concept of constantly changing prices is becoming increasingly professionalized and more closely timed as technological change progresses. Due to the rapid development of information technology, dynamic pricing has become one of the most important levers within the price management process.