Pricing and Costing

If your role in sales, marketing or product management involves setting or accepting prices, you'll want to be certain that your mind is open to consideration of alternative approaches for deciding what's best. To set pricing you'll want to increase the perceived value of the product's benefits to the customer. To accept deviations from list pricing you'll want to really know and understand the incremental costs within your specific organization.

The course is designed to help you think about the alternatives you have in setting prices. It is intended to help you determine what makes an "optimum" price, and if one exists for your particular circumstances. The course is also intended to give you insight into the differences between the "standard cost" often referred to in industry and the real costs of doing incremental business. To successfully manage a business, you must understand where your costs actually come from.

The course includes an exercise involving a real-world set of decisions about accepting orders at well below list price. It works through real considerations ranging from the real capacity of your organization to the impact of your decision on the share price of your stock. It is intended to stretch your thinking horizons and yet give you techniques you might apply during your next workday.

This course is designed for Sales, marketing or product management professionals who wish to add to their ability to be effective by bringing business discipline to pricing decisions. It is also suitable for research, development, engineering and technical support professionals who want to broaden their understanding of business so as to bring more added value to the activities of their firm.

• Decide what sort of arguments you'll make for pricing approval
• Decide what is an optimum result of pricing
• Deal with market-based "commodity" pricing
• Use differentiation
• Build perceived value in a product
• Use dollar-based benefit analysis as the basis of pricing
• Use unbundling to build value
• Assess alternatives and zero in on a price
• Understand standard costs and their place in an organization
• Use incremental costing as a basis for decision makin

1. Pricing as an art
   • Considerations about the decision maker

2. Market-based or commodity pricing

3. Unbundling to build perceived value
   • What's part of your equipment sale?
   • What's part of your materials sale?

4. Summary principles

5. Understanding what "optimum" means
   • Finding an optimum for maximizing sales volume
   • Finding an optimum for maximizing margin

6. Value-based pricing
   • Putting a value on benefits
   • How much is a dollar worth? An exercise in value
   • Perceived value

7. Incremental costing
   • Exercise in determining true incremental costs
   • Using incremental costs as a basis for action

Mr. Verderber is a senior Quest Team training coach and a retired industry executive. His training focus is on providing financial knowledge for professionals in numerous industries, along with pricing and modeling development knowledge for management.

He has been a Quest Team instructor in open enrollment and On-Demand programs since 1994, while still working in industry. He is highly experienced in financial concepts, team building, organizational development, and employee motivation.

As a young engineer out of MIT he was mentored by an executive who taught him about business and financial disciplines. He advanced in his career to company president and attributes a great deal of his career success to this mentoring. Joe has been motivated to "give back" by training others and his retirement has allowed him to fully focus his energies in this area.

Joe gained experience in the high-tech equipment businesses in R&D, engineering, product management, marketing, sales and general management, He was hired as President of Teradyne Laser Systems, Inc. and then as VP and General Manager of General Scanning Inc.'s (now GSI Group) Laser Systems Division. He has significant experience doing business in Asia and Europe. He also served on the Board of General Scanning Japan K.K., retiring as its Chairman, and was a Geschaftsfuhrer of General Scanning GmbH in Germany.

Joe holds Bachelor's and Master's Degrees in Mechanical Engineering from the Massachusetts Institute of Technology where he was a National Merit and National Science Foundation Scholar. He also completed the Advanced Management Program at the Harvard Graduate School of Business.