Background Note | HBS Case Collection | March 2014

Setting Price Effectively

by Nava Ashraf and Kristin Johnson

Abstract

Price is one of the most powerful instruments a manager can use to influence the take-up of her product, especially in a subsidized and noncompetitive market as is common for global health products. However, the question of whether and how to price has been the subject of extensive policy debate: whether to charge users for life-saving health products and services, whether to distribute them for free, or whether to give additional incentives for individuals to use them. This note describes the latest, cutting-edge, research on how pricing influences the end user's decision to purchase and use vitally needed health products, opening a deeper and informed dialogue about pricing. The note concludes with a succinct guide to how to optimally price products based on different organizational goals and product characteristics.

Citation:

Ashraf, Nava, and Kristin Johnson. "Setting Price Effectively." Harvard Business School Background Note 914-037, March 2014. (Request a courtesy copy.)