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Decision: Multidimensional Prices

In: Price Management

Author

Listed:
  • Hermann Simon

    (Simon-Kucher & Partners Strategy and Marketing Consultants)

  • Martin Fassnacht

    (WHU – Otto Beisheim School of Management, Chair of Marketing and Commerce)

Abstract

One-dimensional pricing, discussed in the preceding chapter, is rather the exception than the rule in economic reality. Companies typically charge different prices for the same product depending on target group, region, time, or purchase volume. This kind of price differentiation requires the setting of multiple prices or price parameters. Almost all companies offer several products, and their sales are often interdependent. Price management needs to take these inter dependencies into account, because they can have strong effects on a product line’s profit. Offering several products in one package, normally at a reduced price, is referred to as price bundling. This method is effective for finer market segmentation and for better exploiting willingness to pay. The optimization of multidimensional prices requires a deeper understanding of interactions and dependencies, and more detailed information, than one-dimensional pricing. This chapter provides the reader with the necessary knowledge.

Suggested Citation

  • Hermann Simon & Martin Fassnacht, 2019. "Decision: Multidimensional Prices," Springer Books, in: Price Management, chapter 6, pages 209-257, Springer.
    • Handle: RePEc:spr:sprchp:978-3-319-99456-7_6
    DOI: 10.1007/978-3-319-99456-7_6
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