Skip to content
Product cover

Pricing as a Strategic Capability

April 15, 2002 | Shantanu Dutta , Mark Bergen , Daniel Levy , Mark Ritson , Mark Zbaracki | Marketing

For too long, most people who run companies have made a variety of unwarranted but detrimental assumptions about pricing. Changing prices, for example, has been looked upon as an easy, quick and reversible process, and new technologies have only reinforced that way of thinking. Similarly, extracting value from a product by pricing it correctly has been seen as relatively uncomplicated; the hard part is creating the valuable product in the first place. But these dismissive attitudes toward pricing miss the mark. Pricing is complex, and it’s only growing more so as new tools and techniques become available.

The ability to set the right price at the right time, any time — the very definition of a pricing capability — is also becoming increasingly important. In fact, in the course of working with dozens of companies in the past couple of years, the authors have spoken with several executives who believe that developing a pricing capability is essential to their business’s survival. And they are backing up their views by investing in three areas: human capital, systems capital and social capital.

The authors explain the nature of these investments and how they come together to form a pricing capability that competitors will have a hard time imitating. They don’t mean to say that building such a capability is a simple task accomplished by committing a few resources to it. It requires an effort that some companies may not be in a position to undertake. Those that do take a comprehensive approach, however, will be able to make superior pricing decisions that fit with their positioning, with their customers, with their suppliers and with evolving market conditions for years to come.

Purchase Options

Educator and Student Discounts Available. Learn more »

  BENCHMARKS  
Loading Time: Base Classes  0.0004
My Controller Construct  0.0008
Build Nav  0.0013
Controller Execution Time ( Products / Route )  0.1160
Total Execution Time  0.1164
  GET DATA  
No GET data exists
  MEMORY USAGE  
1.5689 MB
  POST DATA  
No POST data exists
  URI STRING  
store/pricing-as-a-strategic-capability
  CLASS/METHOD  
products/route
  DATABASE:  MITSLOAN_DEV   QUERIES: 68  (Hide)
0.0005  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0006  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0004  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0004  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0006  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0007  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0018  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0010  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0007  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0013  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0004  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0008  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0014  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0007  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0004  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0002  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0009  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0008  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0020  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0003  

SELECT *
FROM (`carts`)
WHERE `cart_id` =  '8ef5015a79ff1432f79c3804bead67e2'
ORDER BY `created_at` DESC 
0.0003  

SELECT SQL_CALC_FOUND_ROWS cat_id
FROM (`product_categories`)
WHERE `status_id` =  'A'
AND `url_friendly` =  'pricing-as-a-strategic-capability'
AND `parent_id` =  1 
0.0115  

SELECT c.parent_id, c.format_id
                    FROM products AS p, products AS c
                    WHERE p.prod_id = c.parent_id AND
                        c.avail_id IN ('A','B','D') AND
                        c.type_id = 'V' AND
                        (
                            c.sku = 'pricing-as-a-strategic-capability' OR
                            if(c.format_id = 'Certificate', '', p.url_friendly) = 'pricing-as-a-strategic-capability'
                        )
                    LIMIT 1 
0.0006  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  1913 
0.0007  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '1913' 
0.0011  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '1913'
ORDER BY `sort` ASC 
0.0013  

SELECT `cat_id`
FROM (`product_categories__products`)
WHERE `prod_id` =  '1913' 
0.0024  

SELECT *
FROM (`product_flags__products`)
WHERE `prod_id` =  '1913' 
0.0006  

SELECT `sku`
FROM (`products__xsell`)
WHERE `prod_id` =  '1913'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0424  

SELECT `products`.`parent_id`
FROM (`transaction_lines`)
JOIN `products` ON `products`.`sku` = `transaction_lines`.`sku`
JOIN `product_categories__products` ON `products`.`parent_id` = `product_categories__products`.`prod_id`
WHERE `products`.`avail_id` =  'A'
AND TO_DAYS(transaction_lines.updated_at) < (TO_DAYS(NOW()) - 90)
AND `product_categories__products`.`cat_id` IN ('247') 
GROUP BY `products`.`parent_id`
ORDER BY COUNT(*) DESC
LIMIT 6 
0.0016  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '1211' 
0.0008  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '1211' 
0.0004  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '1211'
ORDER BY `sort` ASC 
0.0003  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '305' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '305' 
0.0022  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '305'
ORDER BY `sort` ASC 
0.0001  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '1325' 
0.0002  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '1325' 
0.0002  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '1325'
ORDER BY `sort` ASC 
0.0002  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '523' 
0.0013  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '523' 
0.0008  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '523'
ORDER BY `sort` ASC 
0.0003  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '3987' 
0.0009  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '3987' 
0.0006  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '3987'
ORDER BY `sort` ASC 
0.0008  

SELECT `parent_id`
FROM (`products`)
WHERE `prod_id` =  '339' 
0.0006  

SELECT *
FROM (`products`)
WHERE `products`.`prod_id` =  '339' 
0.0004  

SELECT *
FROM (`authors`)
JOIN `products__authors` ON `authors`.`author_id` = `products__authors`.`author_id`
WHERE `products__authors`.`prod_id` =  '339'
ORDER BY `sort` ASC 
0.0004  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '1913'
AND `kind` =  'image_600x600'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0014  

SELECT *
FROM (`media`)
WHERE `media`.`media_id` =  '894' 
0.0012  

SELECT *
FROM (`mime_types`)
WHERE `mime_types`.`extension` =  'jpg' 
0.0007  

SELECT *
FROM (`media_metadata`)
WHERE `media_id` =  '894' 
0.0004  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '1913'
AND `kind` =  'gallery_image'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0005  

SELECT *
FROM (`products`)
WHERE `avail_id` IN ('A', 'B', 'C', 'H') 
AND `parent_id` =  '1913'
AND `type_id` =  'V'
ORDER BY IF(position = 0, 1, 0) ASC , `position`, `title` 
0.0016  

SELECT `c`.`format_id`, `c`.`price`, `c`.`sale_price`
FROM (`products` AS c)
WHERE `c`.`prod_id` =  '1914'
LIMIT 1 
0.0004  

SELECT SQL_CALC_FOUND_ROWS media_id, position
FROM (`media`)
WHERE `foreign_key_table` =  'products'
AND `foreign_key_column` =  'prod_id'
AND `foreign_key_value` =  '1914'
AND `kind` =  'thumbnail'
ORDER BY IF(position = 0, 1, 0) ASC , `position` 
0.0003  

SELECT `product_categories__products`.`cat_id`
FROM (`product_categories__products`)
JOIN `product_categories` ON `product_categories__products`.`cat_id` = `product_categories`.`cat_id`
WHERE `product_categories__products`.`prod_id` =  '1913'
AND `product_categories`.`parent_id` =  1
AND `product_categories__products`.`cat_id` NOT IN (1, 261)  
0.0011  

SELECT `cat_id` AS id, `parent_id` AS parent, `status_id`, `name`, `description`, `url_friendly`, `page_title`, `meta_keywords`, `meta_description`, `position`, `updated_at`
FROM (`product_categories`)
WHERE `cat_id` != 1
ORDER BY `parent_id`, IF(position = 0, 1, 0) ASC , `position`, `name` 
0.0010  

SELECT *
FROM (`product_categories`)
WHERE `status_id` =  'A'
AND `parent_id` =  1
AND `cat_id` NOT IN (1, 261) 
ORDER BY `name` 
0.0004  

SELECT *
FROM (`site_settings`)
WHERE `option_key` =  'announcement' 
  HTTP HEADERS  (Show)
  SESSION DATA  (Show)
  CONFIG VARIABLES  (Show)