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This teaching case discusses the challenges facing GreenField Software (GFS), a start-up company offering software products and services to support sustainability. The case describes the start-up process, the crafting of the firm's strategy and structure, and the development of its products and services in the emerging 'green Information Technology (IT)' industry. It follows the key decisions made by the CEO and his executive team as they navigate a shifting and increasingly competitive marketplace. As GFS approaches the 2-year anniversary of its launch, the team must decide several key issues. These include whether to market their product as a business continuity solution or as a 'green IT' solution; what intellectual property will differentiate them from the competition; and how to respond to the changing needs of the marketplace.

This is an MIT Sloan Management Review article. Although standard economic theory (and common sense) dictates that customers should be just as willing to purchase carpeting priced at $500 plus delivery priced at $100 as they are to purchase carpeting with free delivery priced at $600, recent research suggests that price partitioning, the manner in which a total price is divided into components, affects customers' price perceptions, their willingness to purchase and even their likelihood of repurchasing from the same vendor. The challenge is deciding when to charge separately for extras and when to combine extras into a single total price. Whether "nickel-and-diming" your customers or "keeping things simple"is more effective for a specific transaction depends on a variety of factors, such as whether customers comparison shop, whether they are more sensitive to the prices of some components (delivery) than to others (carpeting), whether the price of one component is small or large relative to the others, whether the company controls the costs and quality of a particular component, and which components are most central to the customer's goals. The authors provide managers with a decision framework to determine when to separate what they charge into a number of parts, and when to roll everything into one price.