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The questions of how to price a product-line across segments and to price an element of the line within a segment is explored here using the market for family automobiles as a test case. Monroe's (1990) psychometric model is considered for pricing between segments and the demand model of Cook and Kolli (1994) and Donndelinger and Cook (1995) is used to study pricing within segments. The segmentation of the market for family automobiles is rationalized by sorting vehicles into groups having similar prices and overall values. A rule of thumb is introduced for pricing in a dynamic market in which the values, costs, and prices of the competing products are volatile as a result of intense competition generating product improvements on a continuing basis.

Product engineers and product planners are routinely faced with trade-off decisions involving the cost of adding a product feature or modifying an existing feature versus its added value to the customer. The purpose of this paper is to assess the use of a personal computer (PC) for surveying respondents' willingness to pay (WTP) for four options - two-tone color, 4x4 drive, sporty trim package, and extended cab -- available on the base 1997 Ford F-150 truck. The results show that the respondents' stated WTP reflected the value of the options as determined from their prices and fraction of sales.