Chapter 18: Setting Price

Chapter Summary:

In this chapter, our primary emphasis is to look at pricing as a five-step process.  The process takes into consideration many different decisions before the marketer arrives at a final selling price.  We will examine this process by first assessing how price fits into the organization’s overall marketing objectives.  Next, we look at several approaches for setting the initial product price.  For many marketers, the initial price is not the final price and adjustments must be made.  In the next step, we consider situations where marketers must make changes to their initial price and the various methods that are available for doing this.  We conclude the five-step process by looking payment options marketers can choose when selling their product.  We complete the discussion of pricing by looking at two additional methods, bid and auction pricing, and see how these fit within pricing strategy.

Key Issues:

  • Steps in the Price Setting Process
  • Step 1: Examine Objectives
  • Step 2: Determine an Initial Price
  • Step 3: Set Standard Price Adjustments
  • Step 4: Determine Promotional Pricing
  • Step 5: State Payment Options
  • Other Pricing Methods

Links to Cited References:

(note: Some links may no longer be active, if this is the case check Accessing Marketing Stories for hints on accessing.)

  1. Banham, R., “The Price is (More) Right,” CFO Magazine, June 1, 2011.
  2. Leegin Creative Leather Products vs. Psk Inc., U.S. Supreme Court, June 28, 2007.
  3. Biskupic, J., “States Try to Counter Supreme Court’s Minimum-Price Ruling,” USA Today, December 22, 2010.
  4. Rich, M., “Math of Publishing Meets the E-Book,” New York Times, February 28, 2010.
  5. Kunz, B., “How Apple Plays the Pricing Game,” MSNBC, September 6, 2010.
  6. “Catering to the Costco Mindset: Finding the ‘Sweet Spot’ in Quantity Discounts,” Knowledge @ Wharton, October 27, 2010.
  7. Elliott, S., “When 50 Percent Off Just Won’t Do,” New York Times, October 11, 2010.
  8. Oricchio, R., “The Pricing Mistake That Cost $1.6M,” Inc. Magazine, March 24, 2010.$16m-.html
  9. Palmer, J., “Walmart Deals Carefully Exclude Oklahoma,” NewsOK, March 2, 2011.
  10. Boehret, K., “Google Mobile App Aims to Turn Phones Into Wallets,” Wall Street Journal, September 21, 2011.
  11. “Mobile Donations Make Giving Easier,” Marketplace – American Public Radio, January 14, 2010.
  12. Fowler, G.A. and S. Morrison, “EBay Attempts to Clean Up the Clutter,” Wall Street Journal, October 31, 2010.,,SB10001424052748703817604575585320835209814,00.html
  13. Wasserman, E., “How to Price Your Products,” Inc. Magazine, February 1, 2010.
Chapter 19: Managing External Forces
Chapter 17: Pricing Decisions