Pricing and Revenue Analytics
Sommario
Class 1- Web -Lecture Myths .............................................................................................................. 4
1.1 Pricing: Guided by Principles or Driven by Myths? ................................................................... 4
1.2 Six Common Pricing Myths .................................................................................................................. 5
Myth 1 – Costs Are the Basis for Pricing ................................................................................................................... 5
Myth 2 – Small Price Changes Have Little Impact .................................................................................................... 5
Myth 3 – Customers Are Highly Price Sensitive ....................................................................................................... 6
Myth 4 – Products Are Difficult to Differentiate ....................................................................................................... 6
Myth 5 – High Market Share = High Profit................................................................................................................ 7
Myth 6 – Managing Price Means Changing Price ...................................................................................................... 7
1.3 Base Pricing on Scientific Principles & Experimentation .................................................................. 8
Summary Table........................................................................................................................................................... 8
Class 1- 20 Ottobre 2025 – Introduction ............................................................................................ 8
1. Introduction and Example ................................................................................................................. 8
1.1 Why is pricing so hard? ........................................................................................................................................ 9
1.2 Who is responsible for pricing in a firm? ............................................................................................................. 9
1.3 What factor enter the price decision ................................................................................................................... 10
1.4 Summury ............................................................................................................................................................ 10
2. Common pricing myths .................................................................................................................... 10
2.1 Pricing Guided by principle or driven by myths ................................................................................................ 10
2.2 The Six Pricing Myths ........................................................................................................................................ 11
2.2.1 Myth 1 – Costs Are the Basis for Pricing ................................................................................................... 11
2.2.2 Myth 2 – Small Price Changes Have Little Impact .................................................................................... 11
2.2.3 Myth 3 – Customers Are Highly Price-Sensitive ....................................................................................... 12
2.2.4 Myth 4 – Products Are Difficult to Differentiate ....................................................................................... 12
2.2.5 Myth 5 – High Market Share = High Profit ................................................................................................ 12
2.2.6 Myth 6 – Managing Price Means Changing Prices .................................................................................... 13
2.3 Base Pricing on Scientific Principles and Experimentation ............................................................................... 13
Example: General Motors Case ........................................................................................................................... 14
3. Foundations of profitable pricing ......................................................................................................... 14
3.1 Value base pricing .............................................................................................................................................. 14
3.2 Deriving consumer WTP– price sensitivity........................................................................................................ 14
Example: Ski Pass Pricing ................................................................................................................................... 15
3.3 Limits to value-based pricing ............................................................................................................................. 15
Class 2 – Web Lecture – Unique Pricing Approaches ..................................................................... 16
3.1 Overview of Pricing Approaches Covered ......................................................................................................... 16
3.2 Pay-per-performance (Pay-per-use) ................................................................................................................... 16
Advantages: ......................................................................................................................................................... 17
Disadvantages: ..................................................................................................................................................... 17
3.3 Flat Fees and Subscriptions ................................................................................................................................ 17
Key Features: ....................................................................................................................................................... 17
Examples:............................................................................................................................................................. 18
Flat Fee Bias: ....................................................................................................................................................... 18
Revolutionary Examples: ..................................................................................................................................... 18
3.4 Revenue Management (or Yield Management).................................................................................................. 18
Key Criteria for Application: ............................................................................................................................... 18
Examples:............................................................................................................................................................. 19
Impact: ................................................................................................................................................................. 19
3.5 Pricing at Zero .................................................................................................................................................... 19
Examples:............................................................................................................................................................. 19
1
, Revenue Generation:............................................................................................................................................ 19
Class 2 – Pricing Individual Products .............................................................................................. 19
1. Basic pricing approaches .................................................................................................................. 20
1.1 Cost based ........................................................................................................................................................... 20
1.1.1 Cost-plus pricing ......................................................................................................................................... 20
1.1.2 Target pricing .............................................................................................................................................. 20
1.1.3 Evaluation cost based.................................................................................................................................. 21
1.2 Competitive based pricing .................................................................................................................................. 21
1.2.1 Evaluation competitive pricing ................................................................................................................... 22
1.3 Value based Pricing ............................................................................................................................................ 22
1.3.1 Evaluation value- based pricing .................................................................................................................. 23
1.4 Relationship between pricing method ................................................................................................................ 24
Special case — optimizing price for a monopolist .............................................................................................. 24
2. Participative pricing approaches ..................................................................................................... 25
2.1 Auctions .............................................................................................................................................................. 25
2.2 Name- your-own-price (NYOP) ......................................................................................................................... 27
2.3 Pay what-you want pricing (PWYW) ................................................................................................................. 29
3. Other unique pricing approaches (Web-lecture) ........................................................................... 32
3.1 Pay-per-performance (Pay-per-use) ................................................................................................................... 32
3.2 Flat Fees and Subscriptions ................................................................................................................................ 33
3.3 Revenue Management (or Yield Management).................................................................................................. 33
3.4 Pricing at Zero .................................................................................................................................................... 34
Class 3 - Pricing with multiple products .......................................................................................... 35
1. Demand Interdependencies – the basics ......................................................................................... 35
1.1 The intuittuion .................................................................................................................................................... 35
1.2 Cross-price elasticity .................................................................................................................................. 36
1.3 Substitute or complement? ................................................................................................................................. 37
1.4 Modeling own - & cross price elasticity ............................................................................................................. 38
1.5 Are cross price elasticities symmetric? .............................................................................................................. 39
1.6 Competitive Interplay ......................................................................................................................................... 40
1.7 Application – substitution between nicotine products Read compulsory study ................................................. 41
2. Pricing substitute products............................................................................................................... 43
2.1 Premium Pricing ................................................................................................................................................. 43
2.2 Image Pricing ...................................................................................................................................................... 44
2.3 Freemiums .......................................................................................................................................................... 44
3. Pricing complementary products..................................................................................................... 46
3.1 Price Bundling .................................................................................................................................................... 46
3.2 Captive Pricing ................................................................................................................................................... 47
3.3 Two- part tariffs .................................................................................................................................................. 48
3.4 Loss leader (Controversial) ................................................................................................................................ 49
3.5 Bait Pricing (Illegal) ........................................................................................................................................... 49
Class 4 – Psychological aspects of pricing ....................................................................................... 50
1. Rational decisions and prices ................................................................................................................ 50
1.1 Economic vs. Behavioral-Based Decisions ........................................................................................................ 50
1.2 The Trust Game .................................................................................................................................................. 50
1.3 Rational Choice vs. Cognitive Limitations......................................................................................................... 51
1.4 Student Registration and University Tuition Fee ............................................................................................... 52
1.5 Cognitive Foundation of (Biased) Price Perceptions ......................................................................................... 53
1.6 How to Deal with This........................................................................................................................................ 54
2. Violations of rational choice by consumers ......................................................................................... 54
2.1 Price–Quality Inferences .................................................................................................................................... 55
2.2 Independence of Irrelevant Attributes ................................................................................................................ 55
2.3 Framing and Context Effects .............................................................................................................................. 56
2.4 Price-Precision Effect ......................................................................................................................................... 57
2
, 2.5 Power of 9-Ending (or Odd) Prices .................................................................................................................... 57
2.6 Sales Signs and Deal Effects .............................................................................................................................. 58
2.7 Discount Presentation Format ............................................................................................................................ 59
2.8 Price Font, Color, and Format Effects ................................................................................................................ 59
2.9 Denominator Neglect .......................................................................................................................................... 59
2.10 Unit (or Scale) Effect ........................................................................................................................................ 60
2.11 Deal Obsession (a.k.a. “contest” or “sweepstakes” effect) .............................................................................. 60
2.12 Paying More—and Being Happier About It ..................................................................................................... 60
2.13 Justifications for Discounts and Price Increases............................................................................................... 61
2.14 Price Partitioning .............................................................................................................................................. 61
2.15 Scarcity Effect .................................................................................................................................................. 62
2.16 Preference Reversals (Joint vs. Separate Evaluation) ...................................................................................... 62
2.17 Attraction (Decoy) Effect ................................................................................................................................. 62
2.18 Compromise Effect ........................................................................................................................................... 63
2.19 Anchoring Effect .............................................................................................................................................. 64
2.20 Advertised Reference Price (ARP) ................................................................................................................... 64
2.21 Willful Overpricing .......................................................................................................................................... 65
Summary – Why Understanding These Anomalies Matters .................................................................................... 65
3. Violations of rational decision making by managers .......................................................................... 65
3.1 Conformity Bias (“Following the Crowd”) ........................................................................................................ 66
3.2 Competitive Neglect Bias ................................................................................................................................... 66
3.3 Competitive Obsession (Overreaction Bias) ...................................................................................................... 67
3.4 Use of Heuristics in Managerial Pricing Decisions ............................................................................................ 67
3.5 The Underpricing of Innovations ....................................................................................................................... 68
Class 5 – Promotions......................................................................................................................... 69
1. Formats & Classification ....................................................................................................................... 70
1.1 Trade Vs consumer promotions ................................................................................................................. 70
1.2 Trade promotion ......................................................................................................................................... 70
1.3 Consumer promotions ................................................................................................................................ 71
1.4 Combining promotions ....................................................................................................................................... 72
2. Measuring promotion effectiveness ...................................................................................................... 73
2.1 Disentangling the Promotion Effects .................................................................................................................. 75
2.2 Measuring Promotions effectiveness .................................................................................................................. 77
2.2.1 Scan Pro model ........................................................................................................................................... 77
2.2.2 Romi – return on marketing investment ..................................................................................................... 79
2.2.3 Purchase incidence mode ............................................................................................................................ 81
3. Promotions innovations ........................................................................................................................ 82
3.1 Approaches for More Targeted Promotions ....................................................................................................... 82
3.1.2 Loyalty-card-only offers ............................................................................................................................. 82
3.1.3 Online personalized offers .......................................................................................................................... 82
3.2 New Types of Promotions .................................................................................................................................. 83
3.3 New Promotion Design ...................................................................................................................................... 84
Compulsory reading - questions ....................................................................................................... 85
1. Where does the big sales peak during promotion weeks come from?.................................................................. 85
2. Do consumers respond in the same way to permanent price changes as to temporary promotions? Why or why
not? ........................................................................................................................................................................... 85
3. Why do firms often combine promotions, such as offering a price cut together with a feature in the store flyer?
.................................................................................................................................................................................. 85
Class 6 - Price & Competition .......................................................................................................... 86
1. Competitive price reactions .............................................................................................................. 86
1.2 Competitive (price) reaction ............................................................................................................... 87
1.2.1 Types of competitive reactions ........................................................................................................................ 87
1.2.2 Guidelines ........................................................................................................................................................ 88
1.2.3 Modelling price reaction elasticities (log–log model) ....................................................................................... 88
1.2.4 When should a brand react to a competitor’s price cut? ................................................................................. 89
3
, 1.2 When should brand responds? (Web lecture) ................................................................................... 90
1.2.1 The Leeflang & Wittink Framework (8 Scenarios) .................................................................................... 90
1.2.2 What Managers Should Avoid .................................................................................................................... 92
2. Price transparancy ............................................................................................................................ 92
2.1 Strategies to discourage price transparency....................................................................................................... 92
2.1.1 Tactics used to discourage price comparison ................................................................................................. 93
2.2 Strategies to enhance price transparency .......................................................................................... 93
3. Price wars ........................................................................................................................................... 94
3.1 Definition ............................................................................................................................................................. 94
3.2 Case: the Dutch supermarket price war ............................................................................................................. 94
3.3 Antecedents of a price war ................................................................................................................................. 95
3.4 Consequences of a price war ............................................................................................................................. 96
Class 7 – Guest lecture and special settings ..................................................................................... 96
1. Consumer electronics and market (Web lecture)........................................................................... 96
2. Pricing digital goods .......................................................................................................................... 97
2.1 Digital good and their feature ............................................................................................................................. 97
2.2 Revenue models .................................................................................................................................................. 97
2.2.1 Revenue from selling content ..................................................................................................................... 97
2.2.2 Revenue from selling consumer information.............................................................................................. 98
2.2.3 Revenues from advertising ......................................................................................................................... 98
2.2.4 Combining revenue models ........................................................................................................................ 99
2.2.5 Special case: platform sites ......................................................................................................................... 99
3. Pricing & AI..................................................................................................................................... 100
3.1. AI use in personalized prices & targete promotions........................................................................................ 100
3.2. AI use in dynamic pricing ............................................................................................................................... 101
3.3 Conclusion ........................................................................................................................................................ 102
Class 1- Web -Lecture Myths
1.1Pricing: Guided by Principles or Driven by Myths?
• Key idea: Pricing is one of the most complex managerial decisions — there is no single
“right” price. Managers therefore often rely on simplified rules of thumb that sound
logical but are scientifically incorrect.
• These false ideas are called pricing myths:
→ Widely held, unquestioned beliefs that lack scientific foundation (Hinterhuber,
2016).
• Why myths persist:
o Managers wrongly associate certain actions with positive outcomes.
o They infer causality without testing alternative actions or collecting empirical
evidence.
• Goal of the course:
o Make students aware of these misconceptions so they can avoid costly pricing
mistakes.
o Teach scientifically grounded pricing principles instead.
o Emphasize experimentation and research — price should be continuously
adjusted and tested based on customer response.
• Main reference: Hinterhuber, A. (2016). Business Horizons – “Common Pricing Myths”.
4
Sommario
Class 1- Web -Lecture Myths .............................................................................................................. 4
1.1 Pricing: Guided by Principles or Driven by Myths? ................................................................... 4
1.2 Six Common Pricing Myths .................................................................................................................. 5
Myth 1 – Costs Are the Basis for Pricing ................................................................................................................... 5
Myth 2 – Small Price Changes Have Little Impact .................................................................................................... 5
Myth 3 – Customers Are Highly Price Sensitive ....................................................................................................... 6
Myth 4 – Products Are Difficult to Differentiate ....................................................................................................... 6
Myth 5 – High Market Share = High Profit................................................................................................................ 7
Myth 6 – Managing Price Means Changing Price ...................................................................................................... 7
1.3 Base Pricing on Scientific Principles & Experimentation .................................................................. 8
Summary Table........................................................................................................................................................... 8
Class 1- 20 Ottobre 2025 – Introduction ............................................................................................ 8
1. Introduction and Example ................................................................................................................. 8
1.1 Why is pricing so hard? ........................................................................................................................................ 9
1.2 Who is responsible for pricing in a firm? ............................................................................................................. 9
1.3 What factor enter the price decision ................................................................................................................... 10
1.4 Summury ............................................................................................................................................................ 10
2. Common pricing myths .................................................................................................................... 10
2.1 Pricing Guided by principle or driven by myths ................................................................................................ 10
2.2 The Six Pricing Myths ........................................................................................................................................ 11
2.2.1 Myth 1 – Costs Are the Basis for Pricing ................................................................................................... 11
2.2.2 Myth 2 – Small Price Changes Have Little Impact .................................................................................... 11
2.2.3 Myth 3 – Customers Are Highly Price-Sensitive ....................................................................................... 12
2.2.4 Myth 4 – Products Are Difficult to Differentiate ....................................................................................... 12
2.2.5 Myth 5 – High Market Share = High Profit ................................................................................................ 12
2.2.6 Myth 6 – Managing Price Means Changing Prices .................................................................................... 13
2.3 Base Pricing on Scientific Principles and Experimentation ............................................................................... 13
Example: General Motors Case ........................................................................................................................... 14
3. Foundations of profitable pricing ......................................................................................................... 14
3.1 Value base pricing .............................................................................................................................................. 14
3.2 Deriving consumer WTP– price sensitivity........................................................................................................ 14
Example: Ski Pass Pricing ................................................................................................................................... 15
3.3 Limits to value-based pricing ............................................................................................................................. 15
Class 2 – Web Lecture – Unique Pricing Approaches ..................................................................... 16
3.1 Overview of Pricing Approaches Covered ......................................................................................................... 16
3.2 Pay-per-performance (Pay-per-use) ................................................................................................................... 16
Advantages: ......................................................................................................................................................... 17
Disadvantages: ..................................................................................................................................................... 17
3.3 Flat Fees and Subscriptions ................................................................................................................................ 17
Key Features: ....................................................................................................................................................... 17
Examples:............................................................................................................................................................. 18
Flat Fee Bias: ....................................................................................................................................................... 18
Revolutionary Examples: ..................................................................................................................................... 18
3.4 Revenue Management (or Yield Management).................................................................................................. 18
Key Criteria for Application: ............................................................................................................................... 18
Examples:............................................................................................................................................................. 19
Impact: ................................................................................................................................................................. 19
3.5 Pricing at Zero .................................................................................................................................................... 19
Examples:............................................................................................................................................................. 19
1
, Revenue Generation:............................................................................................................................................ 19
Class 2 – Pricing Individual Products .............................................................................................. 19
1. Basic pricing approaches .................................................................................................................. 20
1.1 Cost based ........................................................................................................................................................... 20
1.1.1 Cost-plus pricing ......................................................................................................................................... 20
1.1.2 Target pricing .............................................................................................................................................. 20
1.1.3 Evaluation cost based.................................................................................................................................. 21
1.2 Competitive based pricing .................................................................................................................................. 21
1.2.1 Evaluation competitive pricing ................................................................................................................... 22
1.3 Value based Pricing ............................................................................................................................................ 22
1.3.1 Evaluation value- based pricing .................................................................................................................. 23
1.4 Relationship between pricing method ................................................................................................................ 24
Special case — optimizing price for a monopolist .............................................................................................. 24
2. Participative pricing approaches ..................................................................................................... 25
2.1 Auctions .............................................................................................................................................................. 25
2.2 Name- your-own-price (NYOP) ......................................................................................................................... 27
2.3 Pay what-you want pricing (PWYW) ................................................................................................................. 29
3. Other unique pricing approaches (Web-lecture) ........................................................................... 32
3.1 Pay-per-performance (Pay-per-use) ................................................................................................................... 32
3.2 Flat Fees and Subscriptions ................................................................................................................................ 33
3.3 Revenue Management (or Yield Management).................................................................................................. 33
3.4 Pricing at Zero .................................................................................................................................................... 34
Class 3 - Pricing with multiple products .......................................................................................... 35
1. Demand Interdependencies – the basics ......................................................................................... 35
1.1 The intuittuion .................................................................................................................................................... 35
1.2 Cross-price elasticity .................................................................................................................................. 36
1.3 Substitute or complement? ................................................................................................................................. 37
1.4 Modeling own - & cross price elasticity ............................................................................................................. 38
1.5 Are cross price elasticities symmetric? .............................................................................................................. 39
1.6 Competitive Interplay ......................................................................................................................................... 40
1.7 Application – substitution between nicotine products Read compulsory study ................................................. 41
2. Pricing substitute products............................................................................................................... 43
2.1 Premium Pricing ................................................................................................................................................. 43
2.2 Image Pricing ...................................................................................................................................................... 44
2.3 Freemiums .......................................................................................................................................................... 44
3. Pricing complementary products..................................................................................................... 46
3.1 Price Bundling .................................................................................................................................................... 46
3.2 Captive Pricing ................................................................................................................................................... 47
3.3 Two- part tariffs .................................................................................................................................................. 48
3.4 Loss leader (Controversial) ................................................................................................................................ 49
3.5 Bait Pricing (Illegal) ........................................................................................................................................... 49
Class 4 – Psychological aspects of pricing ....................................................................................... 50
1. Rational decisions and prices ................................................................................................................ 50
1.1 Economic vs. Behavioral-Based Decisions ........................................................................................................ 50
1.2 The Trust Game .................................................................................................................................................. 50
1.3 Rational Choice vs. Cognitive Limitations......................................................................................................... 51
1.4 Student Registration and University Tuition Fee ............................................................................................... 52
1.5 Cognitive Foundation of (Biased) Price Perceptions ......................................................................................... 53
1.6 How to Deal with This........................................................................................................................................ 54
2. Violations of rational choice by consumers ......................................................................................... 54
2.1 Price–Quality Inferences .................................................................................................................................... 55
2.2 Independence of Irrelevant Attributes ................................................................................................................ 55
2.3 Framing and Context Effects .............................................................................................................................. 56
2.4 Price-Precision Effect ......................................................................................................................................... 57
2
, 2.5 Power of 9-Ending (or Odd) Prices .................................................................................................................... 57
2.6 Sales Signs and Deal Effects .............................................................................................................................. 58
2.7 Discount Presentation Format ............................................................................................................................ 59
2.8 Price Font, Color, and Format Effects ................................................................................................................ 59
2.9 Denominator Neglect .......................................................................................................................................... 59
2.10 Unit (or Scale) Effect ........................................................................................................................................ 60
2.11 Deal Obsession (a.k.a. “contest” or “sweepstakes” effect) .............................................................................. 60
2.12 Paying More—and Being Happier About It ..................................................................................................... 60
2.13 Justifications for Discounts and Price Increases............................................................................................... 61
2.14 Price Partitioning .............................................................................................................................................. 61
2.15 Scarcity Effect .................................................................................................................................................. 62
2.16 Preference Reversals (Joint vs. Separate Evaluation) ...................................................................................... 62
2.17 Attraction (Decoy) Effect ................................................................................................................................. 62
2.18 Compromise Effect ........................................................................................................................................... 63
2.19 Anchoring Effect .............................................................................................................................................. 64
2.20 Advertised Reference Price (ARP) ................................................................................................................... 64
2.21 Willful Overpricing .......................................................................................................................................... 65
Summary – Why Understanding These Anomalies Matters .................................................................................... 65
3. Violations of rational decision making by managers .......................................................................... 65
3.1 Conformity Bias (“Following the Crowd”) ........................................................................................................ 66
3.2 Competitive Neglect Bias ................................................................................................................................... 66
3.3 Competitive Obsession (Overreaction Bias) ...................................................................................................... 67
3.4 Use of Heuristics in Managerial Pricing Decisions ............................................................................................ 67
3.5 The Underpricing of Innovations ....................................................................................................................... 68
Class 5 – Promotions......................................................................................................................... 69
1. Formats & Classification ....................................................................................................................... 70
1.1 Trade Vs consumer promotions ................................................................................................................. 70
1.2 Trade promotion ......................................................................................................................................... 70
1.3 Consumer promotions ................................................................................................................................ 71
1.4 Combining promotions ....................................................................................................................................... 72
2. Measuring promotion effectiveness ...................................................................................................... 73
2.1 Disentangling the Promotion Effects .................................................................................................................. 75
2.2 Measuring Promotions effectiveness .................................................................................................................. 77
2.2.1 Scan Pro model ........................................................................................................................................... 77
2.2.2 Romi – return on marketing investment ..................................................................................................... 79
2.2.3 Purchase incidence mode ............................................................................................................................ 81
3. Promotions innovations ........................................................................................................................ 82
3.1 Approaches for More Targeted Promotions ....................................................................................................... 82
3.1.2 Loyalty-card-only offers ............................................................................................................................. 82
3.1.3 Online personalized offers .......................................................................................................................... 82
3.2 New Types of Promotions .................................................................................................................................. 83
3.3 New Promotion Design ...................................................................................................................................... 84
Compulsory reading - questions ....................................................................................................... 85
1. Where does the big sales peak during promotion weeks come from?.................................................................. 85
2. Do consumers respond in the same way to permanent price changes as to temporary promotions? Why or why
not? ........................................................................................................................................................................... 85
3. Why do firms often combine promotions, such as offering a price cut together with a feature in the store flyer?
.................................................................................................................................................................................. 85
Class 6 - Price & Competition .......................................................................................................... 86
1. Competitive price reactions .............................................................................................................. 86
1.2 Competitive (price) reaction ............................................................................................................... 87
1.2.1 Types of competitive reactions ........................................................................................................................ 87
1.2.2 Guidelines ........................................................................................................................................................ 88
1.2.3 Modelling price reaction elasticities (log–log model) ....................................................................................... 88
1.2.4 When should a brand react to a competitor’s price cut? ................................................................................. 89
3
, 1.2 When should brand responds? (Web lecture) ................................................................................... 90
1.2.1 The Leeflang & Wittink Framework (8 Scenarios) .................................................................................... 90
1.2.2 What Managers Should Avoid .................................................................................................................... 92
2. Price transparancy ............................................................................................................................ 92
2.1 Strategies to discourage price transparency....................................................................................................... 92
2.1.1 Tactics used to discourage price comparison ................................................................................................. 93
2.2 Strategies to enhance price transparency .......................................................................................... 93
3. Price wars ........................................................................................................................................... 94
3.1 Definition ............................................................................................................................................................. 94
3.2 Case: the Dutch supermarket price war ............................................................................................................. 94
3.3 Antecedents of a price war ................................................................................................................................. 95
3.4 Consequences of a price war ............................................................................................................................. 96
Class 7 – Guest lecture and special settings ..................................................................................... 96
1. Consumer electronics and market (Web lecture)........................................................................... 96
2. Pricing digital goods .......................................................................................................................... 97
2.1 Digital good and their feature ............................................................................................................................. 97
2.2 Revenue models .................................................................................................................................................. 97
2.2.1 Revenue from selling content ..................................................................................................................... 97
2.2.2 Revenue from selling consumer information.............................................................................................. 98
2.2.3 Revenues from advertising ......................................................................................................................... 98
2.2.4 Combining revenue models ........................................................................................................................ 99
2.2.5 Special case: platform sites ......................................................................................................................... 99
3. Pricing & AI..................................................................................................................................... 100
3.1. AI use in personalized prices & targete promotions........................................................................................ 100
3.2. AI use in dynamic pricing ............................................................................................................................... 101
3.3 Conclusion ........................................................................................................................................................ 102
Class 1- Web -Lecture Myths
1.1Pricing: Guided by Principles or Driven by Myths?
• Key idea: Pricing is one of the most complex managerial decisions — there is no single
“right” price. Managers therefore often rely on simplified rules of thumb that sound
logical but are scientifically incorrect.
• These false ideas are called pricing myths:
→ Widely held, unquestioned beliefs that lack scientific foundation (Hinterhuber,
2016).
• Why myths persist:
o Managers wrongly associate certain actions with positive outcomes.
o They infer causality without testing alternative actions or collecting empirical
evidence.
• Goal of the course:
o Make students aware of these misconceptions so they can avoid costly pricing
mistakes.
o Teach scientifically grounded pricing principles instead.
o Emphasize experimentation and research — price should be continuously
adjusted and tested based on customer response.
• Main reference: Hinterhuber, A. (2016). Business Horizons – “Common Pricing Myths”.
4
