A Spreadsheet Pricing Model Approach to Teaching Practical Pricing Concepts in the Marketing Classroom

Operation Valuation

“…While there is a need for a pedagogical description of and theoretical overview of pricing in the classroom, in today's educational landscape it is critical that students obtain an understanding of price making in practice, not simply in theory (Marshall & Pearson, 2007).…”

“…While students can easily be required to design and conceptualize new products or formulate advertising campaigns in relatively low-risk ways, giving students hands-on exercises in making pricing decisions often involves real money, with real consequences, and not every marketing instructor would want to take those risks. Despite this challenge, it is nonetheless “important that students understand and experiment with the practical elements of pricing, including fixed and variable costs, financial goals, sales margins, market potentials and sales goals, and breakeven analysis” (Marshall & Pearson, 2007, p. 87).…”

“…Third, perhaps most simply, a lack of interest and enthusiasm toward pricing theory can be evident on the part of both instructors and students, further making the topic a challenge for the classroom (Duke, 1991; Marshall & Pearson, 2007). Perhaps this is due to the conceptual and textbook definition-centric nature of the topic of pricing.…”

“…As far back as 1949, Seelye (p. 311) noted that because “in the capitalistic economy the mechanism which controls both the allocation of resources and the allocation of output is the price system,” the pricing and price policy sections of marketing courses should not just be descriptive but analytic as well. While there is a need for a pedagogical description of and theoretical overview of pricing in the classroom, in today’s educational landscape it is critical that students obtain an understanding of price making in practice, not simply in theory (Marshall & Pearson, 2007).…”

“…Vander Schee et al (2010) caution that undergraduate students in introductory marketing classes often have little appreciation for the importance of pricing as an integrated component of marketing strategy formulation, and further suggest that the way pricing is often taught treats pricing as a discrete and separate exercise rather than a deeply integrated component the marketing mix. Pedagogical hurdles to the present approaches to teaching price concepts, according to Marshall and Pearson (2007), include inadequate classroom time and the complexity of calculations needed for students to fully understand the nature of pricing. For example, foundational topics include break-even analysis, supply and demand curves, price elasticity, channel analysis, and other economic-centric concepts.…”