Pricing a product and the impact of R&D costs

Pricing plays a crucial role in a company's profitability as it directly contributes to it. For this reason, establishing optimal prices for products or services is of great importance. Business consultants therefore assist their clients in developing pricing strategies.A case study on pricing is an analysis focusing on the pricing of a product or service. It can stand alone or be part of a broader case, such as entering a new market.In a case interview, you can approach this case type in three steps: 1. Investigate the CompanyAt the outset of your case, you should gain a solid understanding of your client's business model.What products does the company sell and where does the company stand in the market? For instance, is the company a market leader? In terms of volume or quality or both?What is the company’s key objective? Profits? Market share? Growth? Brand positioning? Make sure to clarify the objective before starting the analysis. 2. Investigate the ProductAfter familiarizing yourself with the company's business model, it's time to learn more about the product. When examining the product, it's important to pay attention to the following aspects:Product differentiation: Analyze how the client's product differs from those of competitors. Explore not only the product's features but also its production processes and methods.Unique Selling Proposition (USP): Identify the unique selling point of the product. What makes it unique and attractive to potential customers?Alternatives and substitutes: Consider alternative or substitute products in the market as well. How do they compare to the client's product?Product lifecycle: Determine the stage of the product lifecycle. This can influence the pricing and marketing strategy.Predictability of supply and demand: Examine whether supply and demand for the product are predictable. This can help assess risks in pricing and take appropriate measures.Once you've thoroughly assessed these aspects, you'll have a clearer understanding of the product and its positioning in the market, which will inform your pricing strategy recommendations. 3. Choose a Pricing StrategyThe choice of strategy depends on the information gathered in the first two steps. There are three important pricing strategies:Competitor-Based PricingWith this strategy, also known as 'benchmarking', the price is determined based on the prices set by our competitors. So, you want to find out:Are there comparable products/services?If yes, how do they compare to the client's product?What are their prices? Important: Keep in mind that competitors are likely to adjust their prices once the client introduces their product.Cost-Based PricingWith cost-based pricing, the price of a product or service is set based on the accumulated item costs (break-even) plus a reasonable profit margin. This strategy varies by industry due to different cost structures and margins. Therefore, it's important to understand the specific customer costs before setting a price (taking into account fixed and variable costs).Although cost-based pricing offers a simple and transparent method, it does not consider the perceived value of the product or service to customers and may be less effective in certain markets. To determine customer willingness to pay, it's important to consider this and possibly break down the price into different components, such as a separate price for the product and delivery costs.Value-Based PricingValue-based pricing is a strategic approach based on assessing the customer's perception of the product or the amount customers are willing to pay. Different customer segments may have different willingness to pay. This means that companies can set different prices for different customer segments by adjusting the perceived value to justify price changes.A good example of this is the iPhone, a highly differentiated product for which customers are often willing to pay significantly more than the pure costs plus a "typical" margin. This illustrates how customers are inclined to accept a higher price for products they perceive as particularly valuable or differentiated. Key TakeawaysFrom what we've learned previously, we can now extract the following insights as key takeaways:There are three key pricing strategies: Competitor-based pricing, cost-based pricing, and value-based pricing. Cost-based pricing alone is sometimes considered insufficient.Understand the primary objective of the company (profit, market share, growth, brand positioning) as the basis for the pricing strategy.Know the business model, products/services, and market position of the company and consider it in your strategic approach.Understand the customers' willingness to pay and needs, and adjust the pricing strategy to customer preferences and market conditions. 

The model of the "Five Dysfunctions of a Team" comes from the business novel of the same name by Patrick Lencioni. The author, an experienced consultant in team development, tells the story of a tech company that was once successful – until the team began to fall apart. Lencioni shows how certain patterns can hinder a team – leading to a real crisis.Especially in study projects, group work, or later in your career (especially in consulting), it’s important to recognize these dysfunctions – and actively address them. Teamwork is more than task division. It thrives on trust, clarity, and real collaboration.Here are the five main dysfunctions – and how to avoid them. The Five Dysfunctions of a TeamLack of Trust: Without trust, little happens in a team. If you hide weaknesses or uncertainties instead of addressing them openly, no real collaboration occurs. Teams that allow vulnerability perform better, learn faster, and use everyone’s strengths. Trust is the foundation – and without it, all problems follow.Fear of Conflict: It might sound strange, but good teams argue constructively. Avoiding conflict often leaves things unsaid, causing tension and frustration. Open and respectful discussions lead to the best ideas.Lack of Commitment: When decisions aren’t made clearly or collectively, commitment suffers. Why should you commit to a goal you didn’t agree on? Open discussions and clear commitments ensure everyone is truly on board.Avoidance of Accountability: Accountability works only when clearly assigned. When no one knows who’s responsible for what, the “someone else will do it” problem arises. Set clear responsibilities and hold each other accountable.Inattention to Results: What matters most is what you achieve together. If personal egos or career goals take over, focus is lost. This is crucial in consulting teams, where results are measurable. Keeping the bigger picture in mind makes all the difference. Actively Addressing the DysfunctionsBuild Trust: Openness, honesty, and vulnerability lay the foundation for trust.Promote Constructive Conflict: Respect different viewpoints and encourage open communication to turn tensions into productive debates.Make Clear Decisions and Commit to Them: Transparent decisions and commitment ensure accountability.Take Responsibility and Demand Accountability: Ensure everyone takes responsibility and holds each other accountable.Prioritize Team Goals: Put the team’s goals first and make sure personal interests don’t hinder collaboration. What Does This Mean for You as a (Future) Consultant?In consulting, success rarely happens alone. Projects are complex, require teamwork, and are often under time pressure. Without trust, suppressed conflicts, or unclear accountability, projects can fail.Lencioni’s model helps you spot these patterns early – and take action. Openness, accountability, respect, and shared goals are not just “nice to haves” but true success factors. Especially in consulting, where you work with many stakeholders.