The future of pricing: Outside-in

The future of pricing: Outside-in

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Article ID: iaor20116849
Volume: 10
Issue: 4
Start Page Number: 392
End Page Number: 395
Publication Date: Jul 2011
Journal: Journal of Revenue and Pricing Management
Authors:
Keywords: hotel industry, pricing, revenue management
Abstract:

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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