ABSTRACT
Pricing – "the only marketing mix variable that generates revenue" – is a complex management challenge with indisputable impact on firm performance. Several studies have examined how firms make pricing decisions and how pricing decisions influence profitability. Others have demonstrated that CEOs, as architects of corporate strategy, impact firm performance by committing organizations to specific courses of action. This chapter talks about how CEO and top executive championing of the pricing within their firms might influence relative firm performance. A unique organizational architecture for pricing and the promotion of a culture of change and pricing knowledge diffusion should become a top priority for CEOs and other senior executives. Cost-based pricing is the simplest and most popular method for setting prices because it carries a sense of financial judgment, which involves adding a profit margin on costs, such as adding a standard percentage contribution margin to the products and services.
