Strategic and Innovative Pricing: Price Models for a Digital Economy

Description

This book provides a concrete guide on how to execute strategic pricing to excel in an increasingly dynamic and digitised business environment, while developing and deepening relations with contract partners. The secret lies in crafting innovative price models that reward joint value creation in accordance with the business model, rather than engaging in confrontative zero-sum pricing reasoning. Strategic and Innovative Pricing: Price Models for a Digital Economy provides hands-on tools that are applied on three interconnected levels of analysis. It illustrates how to explore the business ecology to understand its dynamics and how digitisation enables it to prosper and demonstrates how to construct a viable business model that enables an organisation to navigate in its vibrant ecology. Finally, and most importantly, it shows how to use innovative price models to realize and monetise the business model and its value offering, making the organisation and its partnerships sustainable. Models pertaining to the three levels of analyses are applied in rich case studies and examples from different countries, and the book includes guidelines on how to use them. Special attention is paid to digitisation as an underlying theme, making this book of interest to researchers, academics, and students in the fields of strategic management and technology & innovation management. Cover Half Title Series Page Title Page Copyright Page Contents List of Figures List of Tables 1 A New Perspective on Pricing Introduction Pricing That Attracts Customers Conclusions Before We Started The Book’s Background in a First Case—And Then More PART I Theory and Conceptual Models 2 Business Ecologies—A Way of Understanding Your Environment Introduction Background—Interaction as Directed Collaboration in a Business Ecology Business Ecologies as Dynamic Interaction Between Enterprise and Environment Business-Ecology Examples Minecraft and the Internet-Based Game Ecology Skype and the Communication Ecology Spotify and Developments in the Music Ecology The Car Industry From a Business-Ecology Perspective The Dissemination of Business Concepts—The Example Functional Rental Implications 3 Business Models Introduction A Definition of the Business Model Concept Three Perspectives of Business Models Concept A Formal Description of Business Models Business Model Value Creation Tangible and Intangible Values The Role of Subcontractors, Partners, Activities and Resources in Value Creation The Cost of Value Creation Business Model Value Capture The Role of Customers, Relations and Distribution Channels in Value Capture Value Capture and Revenues Levels of Aggregation in Business Model Analysis Implications 4 Price Models Introduction Background to the Price Model Concept The Price Model Equaliser Scope Temporal Rights Influence Price Base Price Formula Application of the Price Model Equaliser: Ryanair Digitisation and Price Models The Relation Between Inbound, Outbound and Internal Price Models Implications 5 Cost and Its Relation to Pricing Introduction Fundamental Assumptions About Costs Increased Importance of Cost Information in Analysing Potential Price Models Cost Dynamics and Pricing Possibility to Influence Timing Recognition of Costs in Accounts Cost Allocation Within Firms How to Measure Costs: Assessing the Use (Consumption) of Resources How to Assess What Is a Relevant Cost to Include in the Cost Model “Inbound” and “Outbound” Pricing—And Internal (Transfer) Pricing The Degree of Partner Collaboration Determines the Cost, Expressed as Inbound Prices Profitability: When Costs Meet Revenues—Delivering What We Promise Cost Assessment Is an Important Input for Price Model Innovation and Selection Implications PART II Cases and Examples 6 Innovative Price Models and Digitisation Introduction Five Cases of Innovative Price Models Extending the Scope of the Offering: The Case of Readly Business Ecology Business Model Price Model Innovative and Digital Traits of Readly’s Price Model Switching From Sale to Rent: The Case of Husqvarna Business Ecology Business Model Price Model Innovative and Digital Traits of Husqvarna’s New Price Model Leaving Pricing to the Market: The Case of Google AdWords Business Ecology Business Model Price Model Innovative and Digital Traits of Google Ads’ Price Model Pricing Customer Value Instead of Costs: The Case of Siemens Business Ecology Business Model Price Model Innovative and Digital Traits of Siemens’ New Price Model Assuming Full Risk—Offering Fixed Price on Taxi Rides: The Case of Cabonline Business Ecology Business Model Price Model Innovative and Digital Traits of Cabonline’s New Price Model Implications 7 A Motor-Vehicle-Focused Transportation Ecology Introduction Waking Up to Electrification Growing Use of Small Vehicles Buy or Rent Business Ecology and Travelling Ideas Regarding Business and Price Models Implications 8 Strategic and Innovative Pricing in a Born-Digital Company: The Pickit Case Introduction The Product Initial Product Current Product The Business Ecology Foreground Actors Background Actors The Business Model Value Creation in the Business Model Value Capture in the Business Model Price Models Three Different Price Models Scope Temporal Rights Influence Price Base Price Formula Implications 9 Conclusion, Discussion and Way Forward Introduction Theoretical Concepts for Strategic and Innovative Pricing Applications of Concepts for Strategic and Innovative Pricing on Empirical Examples Beyond: More Pricing Themes to Explore Division of Labour in Co-Producing Value Time: Exploring the Benefits of Lock-In Risk: Predictions and Conjectures Price Models as Strategy: Impressions vs. Analysis Matching Out, In and Between—And Cost and Incentives Controlling Price Offers A Final Reminder: RITE Relation Intention Technology Environment Author Biographies Index