The deregulation of AT&T, has impacted telecommunication product pricing in the U.S. market. Previously, pricing had been based on cost plus mark-up, as stipulated by regulatory commissions. Now, pricing decisions require consideration of the competitive impact, consumer demand for the product, corporate pricing objectives and marketing strategies. This paper proposes a pricing process that is relevant for this new environment which enables the product manager to price properly.

The method proposed utilizes microeconomic theory and takes into account the product test price, unit cost, opportunity cost, nonprice factor cost and consumer demand. Incorporating a number of different pricing strategies, it simulates their effect on the profitability of the firm and then identifies the product price that will maximize profit.

To facilitate the understanding of the proposed procedure, three cases are included that illustrate its application. Additionally, a product plan to aid in monitoring the market performance of the product is presented.