Basics of Price Management

The potential for price optimization has increased exponentially in recent years due to digitization. Pricing processes must go beyond pure optimization to reflect higher-level decisions about the business model and the revenue model. These vertical processes and interactions are becoming increasingly important as business becomes more digitized. The multidimensional definition of price means that pricing must be part of a company’s strategy process. Strategies deal with the long-term focus on target customers with different products—in diverse regions and sales channels. Consequently, price is a central lever within the framework of corporate strategy. A planned price variation is always about both the right direction and the level of price change. The decisive factor is an accurate assessment of which demand reactions can be expected in the case of planned price changes.