ABSTRACT
Thomas T. Nagle and Joseph Zale highlights the critical role that pricing policies play: pricing policies are required to manage customer expectations and to increase profits. Pricing has to be managed by policy, not by exception: central functions, such as the pricing function, define criteria, that is the requirements that customers or orders must meet in order to qualify for a lower price; The process for developing good policies involves treating each request for a price exception as a request to create or to change a policy. Companies create possibly the most damaging customer expectations when they negotiate prices without policies that tie those prices to customer value and cost to serve. A key to improving buyer's price expectations is thoughtful pricing policies. Pricing policies also deal with how a company will respond to low price offers made to its customers by a competitor. Over time, a company's policies can become a source of competitive advantage.
