ABSTRACT
There are many methods for managing prices intelligently. The most effective approach is usually to tailor products and pricing systems to the needs of customer segments, often referred to as price customization. The general goal of price customization is to broaden the range of products offered so that all customers can find a product suitable for them. However, pricing changes have their risks. It is fair to say that the risks of implementing incorrect pricing measures are definitely as high as the profit opportunities associated with professional pricing. This relationship is demonstrated more clearly in the revenue-risk matrix shown in Figure 4.1. This matrix enables managers to quickly and systematically assess numerous products and price components on the basis of both revenue and risk. The key message is that the greatest risk exists when price changes are implemented in highly price sensitive customer segments. Using this assessment system, managers can efficiently prioritize their price analyses. As always, the key question is, how will customers react to price changes?
