Pricing Models & Tools Flashcards

Which pricing model is most aligned with a 'good-better-best' product line strategy?

Answer: Versioning / tiered pricing

Versioning or tiered pricing creates distinct product versions at different price points to serve multiple willingness-to-pay segments.

A regression-based price response model estimates that for every 1% price increase, units sold decrease by 1.8%. What is the price elasticity?

Answer: -1.8

Price elasticity = % change in quantity / % change in price = -1.8% / 1% = -1.8.

In the context of CPQ (Configure, Price, Quote) tools, what is the primary pricing benefit?

Answer: Ensuring pricing rules and approval workflows are enforced consistently at the point of sale

CPQ tools enforce pricing guardrails, discount approval workflows, and configuration logic at the quote stage.

An airline's revenue management system raises fares as the departure date approaches and seats fill. This is an example of:

Answer: Yield management / dynamic pricing

Yield management dynamically adjusts prices based on remaining inventory and time to maximize revenue per available seat.

Which metric does the 'Gabor-Granger' pricing technique directly produce?

Answer: A demand curve showing purchase intent at various price levels

Gabor-Granger surveys respondents at multiple price points to construct a demand curve of purchase intent vs. price.

A company implements 'price banding' for its sales force. What does this control?

Answer: The range of discount percentages sales reps can offer without manager approval

Price banding defines guardrails — floor and ceiling prices — within which sales reps can negotiate without escalating for approval.

In Economic Value Estimation (EVE), the 'differentiation value' component represents:

Answer: The monetary worth of features that are better or worse than the reference competitor

Differentiation value captures the positive or negative monetary worth of all the ways your offering differs from the reference alternative.