A. V. Prasolov. А Method for Demand Estimation and Pricing for a New Product

V.7, N3, 2009

The article is devoted to elaboration of the algorithm of new product pricing. It is suggested that a new product (or service) is launched in the market where similar products are being sold already. The most important results are simplicity of formulas suggested, useable quantifi able algorithm and possibility to estimate sales volume as a function of new product price. The paper also suggests formulas for estimation of competitive products substitution which are extremely useful when a new product is going to drive out some old products of a given company from the same market segment. Another important focus of the paper is product diffusion process.

Keywords: pricing, new products, substitution, utility function, marketing.