1. 1 Teck-Hua Ho Apr 29, 2006 I. Economic and Behavioral Foundations of Pricing II. Innovative Pricing Concepts and Tools III. Internet Pricing Models Takeaways

2. 2 Teck-Hua Ho Apr 29, 2006 Outline  Top 3 takeaways + your best class session (on an index card)  Top 10 Takeaways  Teaching Evaluation  Sample Exam Questions

3. 3 Teck-Hua Ho Apr 29, 2006 The Ten Takeaways 1. EVC (Is the price too high?, Cumberland Industries). 2. The Ho’s Diagram (breakeven analysis and curve, evaluate price change and separate winners from losers). 3. Four Strategic Principles (1. know your opponents, 2. distinguish between one-shot vs. repeated interaction, 3. develop strategic foresight, and 4. promote coordination) (Federated Industries). 4. Reference Price, Price Image, and Prospect Theory ( Biopure, May Company, Tweeter, Computron) 5. Conjoint Analysis (demand curve and price sensitivity, EVC for brand and features).

4. 4 Teck-Hua Ho Apr 29, 2006 The Ten Takeaways 6. Customize, Customize, Customize (by customer, location, product design (versioning), quantity (nonlinear), and time) (Cambridge Software) 7. Customer vs. Product Margin (bundling, product line pricing, Tweeter etc., lost leader). 8. Experimental Market Testing (price matching, B2B contract Design, seller versus buyer-posted price formats, auction simulation). 9. Revenue Model Design (revenue levers, incentive compatibility, lock-in, eBay and FreeMarkets). 10. Revelation and Efficiency Principles (English Auction). Revenue equivalence and strategic equivalence theorems. Revenue rankings of auction formats.