ajaz_eco_204_2012_2013_chapter_16_Market_Power

Although there was a drop off in volume overall sales

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Unformatted text preview: oups. And in some cases, that can mean charging more. "Most people think of low price, but it's also about capturing the full perceived value of your product," says Glazer. 87 ECO 204 Chapter 16: Analysis of Firms with Market Power (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. In fact, many companies routinely underprice their products, says Robert Drescher, former CEO of Optivo, a San Francisco-based maker of pricing software that closed its doors in October, partly due to its over -reliance on struggling dot-coms as clients. Drescher remains a digital price-strategy believer, and tells of a consumer electronics firm that used Optivo software to test prices for a camera it sold online. The company's two competitors had the same camera priced at $499 and $429 on their Web sites, and its reaction was to match the lowest offer. But the camera cost the company $416, so margins were painfully small. After using the pricing software to test demand for the c...
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