Pricing for Profitability: Activity-Based Pricing for Competitive Advantage Book

	Acknowledgments
	Preface
1	Pricing for Profitability	1
	Three Things Can Happen	1
	The Profit Equation	2
	Responsibility for Pricing	3
	Planning for Profitable Sales	4
	Using Costs to Plan for Profits	8
	Need for Solid Costing Information	10
	Pricing for Competitive Advantage	14
	Objectives of Activity-Based Pricing	16
	Summary	16
2	Economics and Demand	19
	Origin of Capitalist Economics	19
	Modern Capitalist Economics	20
	Price Elasticity	24
	Maximizing Revenue Does Not Maximize Profits	26
	Estimating Customer Demand and Price Elasticity	29
	Demand for Competitively Bid Products	33
	Summary	34
	Note	35
3	Competitive Strategy and Pricing	37
	In Search of Competitive Advantage	37
	Corporate Strategy	39
	Sources of Competitive Advantage	42
	Cost Leadership Strategies	45
	Differentiation Strategies	48
	Focused Strategies	50
	Lean Competition	55
	Strategy of Competitive Bidding	56
	Summary	58
	Notes	59
4	Understanding Pricing Strategy	61
	Strategy Considerations	61
	Ethics of Pricing	62
	Pricing Law in the United States	64
	Price-Based Competition	69
	Market Skimming	74
	Market Penetration	76
	Loss Leader (Profit Leader)	77
	Complementary Pricing	77
	Market Pricing	79
	Satisficing	80
	Value Pricing	80
	Market Segmentation Strategies	81
	Providing Value to the Customer	84
	Summary	86
	Notes	87
5	Costs	89
	Use of the Word Cost	89
	Relationship Between Price and Cost	90
	Development of Cost Accounting	95
	Financial Reporting Systems	98
	Organizing Financial Reporting Systems	100
	Statistics	108
	Summary	110
	Notes	111
6	Activity-Based Costing	113
	Need for Activity-Based Costing	113
	Origins of Activity-Based Costing	114
	Resources	115
	Activities	116
	Processes	116
	Why Use Activities to Assign Cost?	118
	Assigning Costs to Activities	120
	Assigning Activity Costs to Cost Objects	120
	Hierarchy of Activities	121
	Assigning Costs	124
	Accumulating Activity Costs	127
	Further Analyzing Activities	131
	Summary	135
	Notes	136
7	Activity-Based Pricing	137
	Activity-Based Pricing	137
	Objectives of Activity-Based Pricing	138
	Relationship Between Price and Cost	139
	Using Costs in Price Determination	142
	Relationship Between Cost and Volume	143
	Combining Demand and Cost Data to Arrive at Price	146
	Activity-Based Pricing Considerations	151
	Motivating Profit	156
	Summary	161
	Notes	162
8	Activity-Based Pricing Models	163
	Determining Price	163
	Building an Activity-Based Pricing Model	167
	Manufacturing Pricing Worksheets	180
	Pricing Models in Other Industries	190
	Summary	192
	Notes	192
9	Influence of Capacity Utilization	193
	Influence of Efficiency on Price	193
	Capacity Considerations in Pricing	194
	Shortage of Capacity	195
	Excess Capacity	197
	How Excess Capacity Should Influence Price	197
	Summary	204
	Notes	205
10	Target Pricing	207
	Price Points	207
	Planning Profit	208
	Target Costs for Components	212
	Controlling Costs	214
	Summary	215
	Notes	216
11	Price Negotiations	217
	Should Price Be Negotiated?	217
	Understanding Differences Among Buyers	220
	Understanding Purchasing Dynamics	225
	Negotiation Policy	226
	Tips for Successful Price Negotiations	228
	Summary	240
	Notes	242
12	Conclusions and Summary	243
	Pricing for Profitability	243
	Pricing and Economics	243
	Competitive Strategy and Pricing	245
	Understanding Pricing Strategy	247
	Costs	249
	Activity-Based Costing	250
	Activity-Based Pricing	252
	Activity-Based Pricing Models	253
	Influence of Capacity Utilization	253
	Target Pricing	254
	Price Negotiations	255
	Conclusion	256
	Glossary	257
	Index	265