Pricing Concept: Understanding the Difference Between Price Level & Price Structure
A thoughtfully designed complex price structure can increase realized prices and profit without raising asking prices.
Pricing is a complex activity. Managers can approach pricing decisions with different mindsets. When considering a price increase, they can ask, “By how much should we raise our prices?” Or they can frame the challenge as, “How can we improve our (realized) prices without raising our (asking) prices?”
These two questions highlight the distinction between…