The Use of Monte Carlo Simulation for Pricing Analysis

The inherent uncertainty of volume forecasts, price elasticity, and the myriad of other variables that go into pricing decisions demand solid analysis to backup up those decisions. Monte Carlo is a simple to use simulation technique that provides the pricing professional with insight into the possible outcomes of their pricing decisions and the impact that key variables will have on bottom line results. This presentation will explain what Monte Carlo simulation is and give examples of how to apply it to pricing.

Attendees will:

• Understand the concepts behind Monte Carlo simulation
• How Monte Carlo simulation can be used to model both probabilistic pricing variables and financial outcomes of pricing decisions
• How to use Microsoft® Excel to implement Monte Carlo simulations

Presenter:
Thomas J. Cissell
President
The Cistek Group LLC

Bio:
Tom Cissell is the founder of The Cistek Group which assists clients in determining the value of their business solutions and in establishing pricing strategies. Cistek innovations include the introduction of solution benefit mapping techniques, the use of Monte Carlo simulation in support of pricing decisions, competitive analysis utilizing Solution Assessment Space Analysis, and the introduction of solV™ a process oriented benefit Analysis methodology for the valuation of business-to-business solutions. During the past six years as a consultant, Tom has worked with clients ranging from information technology companies such a Siemens ICN and IDX Systems Corporation, to manufacturers such as SGL Carbon.

Prior to forming The Cistek Group, Tom was responsible for the pricing of process automation solutions as Director of Marketing for ABB.
Tom has an engineering degree in Computer and Information Science from The Ohio State University, is the author of a number of articles, and the holder of multiple patents involving new product developments