Mark Stiving

Blog Post
How to Find Competitors’ Prices
Oct 11, 2018 -

The formula for “value-based pricing” is simple. Your buyer’s “willingness to pay” is equal to the competitor’s price plus positive differentiation value minus negative differentiation value. In other words, whatever your competitor is charging plus how much the buyer values what you do better, minus how much the buyer values what your competitor does better. Simple formula, but not so simple to implement. 

Oct 11, 2018 -

The formula for “value-based pricing” is simple. Your buyer’s “willingness to pay” is equal to the competitor’s price plus positive differentiation value minus negative differentiation value. In other words, whatever your competitor is charging plus how much the buyer values what you do better, minus how much the buyer values what your competitor does better. Simple formula, but not so simple to implement. 

Blog Post
Stop Sales Discount Authority!
Oct 04, 2018 -

Earlier this week I had the privilege of interviewing Mark Hunter (TheSalesHunter.com) for an upcoming Pragmatic Live podcast. I’ve been reading Mark’s blogs and books for a long time. He’s a sales trainer who really gets pricing. In our interview, Mark said something I hadn’t heard him or any other sales leader say before. “Don’t give any discount authority to sales.” Wow. 

Oct 04, 2018 -

Earlier this week I had the privilege of interviewing Mark Hunter (TheSalesHunter.com) for an upcoming Pragmatic Live podcast. I’ve been reading Mark’s blogs and books for a long time. He’s a sales trainer who really gets pricing. In our interview, Mark said something I hadn’t heard him or any other sales leader say before. “Don’t give any discount authority to sales.” Wow. 

Blog Post
The Value of Pricing Data from Your Distributors
Sep 28, 2018 -

You are about to read some details of a project I was part of that collected and analyzed some pricing data from one of our distributors. You may not be able to exactly replicate this, but you can likely do something similar or even much better. 

Sep 28, 2018 -

You are about to read some details of a project I was part of that collected and analyzed some pricing data from one of our distributors. You may not be able to exactly replicate this, but you can likely do something similar or even much better. 

Blog Post
Don’t Upset Your Customers – Maybe
Sep 20, 2018 -

“Hello Mark, I have a pricing topic you may or may not want to use in a blog. I recently returned from a weekend trip to Denver. I booked the flights using Travelocity, because the cheap Southwest airlines fares are were all gone. I flew United to Denver and returned on Frontier. Everything about the flights was fine (on-time, cleanliness, quality of service, etc.), with the exception of my online check-in with Frontier. They charged me $40 for a carry-on package that I was not aware of at the time I bought the ticket. I was very mad for two reasons. 

Sep 20, 2018 -

“Hello Mark, I have a pricing topic you may or may not want to use in a blog. I recently returned from a weekend trip to Denver. I booked the flights using Travelocity, because the cheap Southwest airlines fares are were all gone. I flew United to Denver and returned on Frontier. Everything about the flights was fine (on-time, cleanliness, quality of service, etc.), with the exception of my online check-in with Frontier. They charged me $40 for a carry-on package that I was not aware of at the time I bought the ticket. I was very mad for two reasons. 

Blog Post
Who Drives Pricing in Growth Companies?
Sep 12, 2018 -

From a reader: “Mark, I love your daily LinkedIn posts. Thanks for sharing. I find pricing to be a fascinating topic. Question: In your opinion, who should and who usually drives pricing within (tech) growth companies? Most companies I’ve spoken to, it’s all over the place. I feel like it should be a product management function (with inputs from all the relevant stakeholders). What’s your experience?” 

Sep 12, 2018 -

From a reader: “Mark, I love your daily LinkedIn posts. Thanks for sharing. I find pricing to be a fascinating topic. Question: In your opinion, who should and who usually drives pricing within (tech) growth companies? Most companies I’ve spoken to, it’s all over the place. I feel like it should be a product management function (with inputs from all the relevant stakeholders). What’s your experience?” 

Blog Post
What Is Anchoring?
Sep 07, 2018 -

A colleague asked me: “Mark, what is anchoring? I wanted to get your explanation of the concept with regard to pricing and maybe an example if you have one.” Anchoring is a strange phenomenon where the mere act of thinking about a high number biases that person toward higher numbers. 

Sep 07, 2018 -

A colleague asked me: “Mark, what is anchoring? I wanted to get your explanation of the concept with regard to pricing and maybe an example if you have one.” Anchoring is a strange phenomenon where the mere act of thinking about a high number biases that person toward higher numbers. 

Blog Post
Pricing Is Poker, Not Chess
Aug 30, 2018 -

In her book, “Thinking in Bets: Making Smarter Decisions When You Don’t have All the Facts,” Annie Duke started off with “Life is Poker, Not Chess.” Wow. Have you ever read a book that gave you a way of thinking that is just common sense, but you really needed someone to make it clear for you? 

Aug 30, 2018 -

In her book, “Thinking in Bets: Making Smarter Decisions When You Don’t have All the Facts,” Annie Duke started off with “Life is Poker, Not Chess.” Wow. Have you ever read a book that gave you a way of thinking that is just common sense, but you really needed someone to make it clear for you? 

Blog Post
Tariffs and Pricing
Aug 23, 2018 -

Question from a reader: Hi Mark, I have been following you on LinkedIn for several months and I really admire your posts and articles. I am wondering if you have given any consideration into writing an article about tariffs from a pricing perspective? There appears to be a real lack of literature available. Please keep the posts coming! 

Aug 23, 2018 -

Question from a reader: Hi Mark, I have been following you on LinkedIn for several months and I really admire your posts and articles. I am wondering if you have given any consideration into writing an article about tariffs from a pricing perspective? There appears to be a real lack of literature available. Please keep the posts coming! 

Blog Post
Pseudo-Socialist Pricing
Aug 17, 2018 -

Here is a fantastic and funny pricing situation from a friend. Hi Mark, I recently got my curb number repainted by an outfit that allows you to name your price. I thought you’d get a kick out of their complicated pseudo-socialist price list. 

Aug 17, 2018 -

Here is a fantastic and funny pricing situation from a friend. Hi Mark, I recently got my curb number repainted by an outfit that allows you to name your price. I thought you’d get a kick out of their complicated pseudo-socialist price list. 

Blog Post
Price Data, the Internet Arms Race and You
Aug 10, 2018 -

A reader sent in the following: Hey Mark, hope all is well with you these days. Saw this article about Web price scrapers and how companies are using them to optimize their pricing (possibly instantaneously). I thought you’d be interested: https://www.wired.com/story/scraper-bots-and-the-secret-internet-arms-race/ Yes, I’m interested. 

Aug 10, 2018 -

A reader sent in the following: Hey Mark, hope all is well with you these days. Saw this article about Web price scrapers and how companies are using them to optimize their pricing (possibly instantaneously). I thought you’d be interested: https://www.wired.com/story/scraper-bots-and-the-secret-internet-arms-race/ Yes, I’m interested. 

Blog Post
What Is Value-Based Pricing?
Aug 02, 2018 -

Value-Based Pricing (VBP) means to charge what your customers are willing to pay (WTP). This is a simple concept to understand and probably impossible to implement. Every buyer has a different WTP. Perfect VBP implies we can read each buyer’s mind and charge them that one price exactly equal to their WTP. 

Aug 02, 2018 -

Value-Based Pricing (VBP) means to charge what your customers are willing to pay (WTP). This is a simple concept to understand and probably impossible to implement. Every buyer has a different WTP. Perfect VBP implies we can read each buyer’s mind and charge them that one price exactly equal to their WTP. 

Blog Post
Hardware Companies “Selling” Software
Jul 27, 2018 -

Hey hardware companies, WAKE UP!!!! Software companies have much better margins and are a zillion times more profitable. Why is that? If you’re trying to defend hardware companies, you would say, “that’s because software companies have much lower costs.”  That’s a true statement.  But still … 

Jul 27, 2018 -

Hey hardware companies, WAKE UP!!!! Software companies have much better margins and are a zillion times more profitable. Why is that? If you’re trying to defend hardware companies, you would say, “that’s because software companies have much lower costs.”  That’s a true statement.  But still … 

Blog Post
A Pricing Skills Gap?
Jul 18, 2018 -

Here is a question from a reader: I have a skills gap that I need to close. I earned my Certified Pricing Professional (CPP) designation last year through the Professional Pricing Society. At work, we have engaged a pricing optimization firm to apply science to our pricing process. I’ve found myself taking a backseat to a more technical coworker that has more experience in the quantitative aspects of pricing. Any advice? 

Jul 18, 2018 -

Here is a question from a reader: I have a skills gap that I need to close. I earned my Certified Pricing Professional (CPP) designation last year through the Professional Pricing Society. At work, we have engaged a pricing optimization firm to apply science to our pricing process. I’ve found myself taking a backseat to a more technical coworker that has more experience in the quantitative aspects of pricing. Any advice? 

Blog Post
A Horrible Pricing Story
Jul 12, 2018 -

Here is a reader story about horrible pricing. Unfortunately this is far too common. "I thought you might appreciate my recent foray into a pricing battle with my horse boarding facility. A lady lives on and owns a gorgeous horse farm. She agreed to let me board my horses for $250 month per horse.The barn is basic, not fancy and with no other amenities other than a sand arena, so that was a fair price. After 3 weeks of boarding there, she decided to increase the price to $350 to cover the cost of her new fences. I explained that I was willing to pay $300, more than her competitors charged, even though I had a longer commute. She didn’t budge."

Jul 12, 2018 -

Here is a reader story about horrible pricing. Unfortunately this is far too common. "I thought you might appreciate my recent foray into a pricing battle with my horse boarding facility. A lady lives on and owns a gorgeous horse farm. She agreed to let me board my horses for $250 month per horse.The barn is basic, not fancy and with no other amenities other than a sand arena, so that was a fair price. After 3 weeks of boarding there, she decided to increase the price to $350 to cover the cost of her new fences. I explained that I was willing to pay $300, more than her competitors charged, even though I had a longer commute. She didn’t budge."

Blog Post
Why Should Sales NOT be in Charge of Pricing?
Jul 05, 2018 -

A question from a reader: Good morning Mark. The podcasts are excellent, as always. But I have noticed there may be one point you have not covered: “Why should sales not be in charge of pricing?” Thank you for the question. I can think of two reasons why sales should not be in charge of pricing. 

Jul 05, 2018 -

A question from a reader: Good morning Mark. The podcasts are excellent, as always. But I have noticed there may be one point you have not covered: “Why should sales not be in charge of pricing?” Thank you for the question. I can think of two reasons why sales should not be in charge of pricing. 

Blog Post
Starbucks Price Increases: Are They Leading or Signaling?
Jun 26, 2018 -

Starbucks is raising prices. In my last blog post, I discussed the pros and cons of that decision. In this post, let’s look at some more advanced issues. When competitors announce a price increase, they typically do one of two things: They lead or they signal.

Jun 26, 2018 -

Starbucks is raising prices. In my last blog post, I discussed the pros and cons of that decision. In this post, let’s look at some more advanced issues. When competitors announce a price increase, they typically do one of two things: They lead or they signal.

Blog Post
Starbucks Raises Prices – Good or Bad Decision?
Jun 21, 2018 -

Recently, Starbucks raised prices on its coffee. The company said it raised the price of a tall (small) by 10 to 20 cents, or in the ballpark of 5% to 10% of the original price. What will happen? 

Jun 21, 2018 -

Recently, Starbucks raised prices on its coffee. The company said it raised the price of a tall (small) by 10 to 20 cents, or in the ballpark of 5% to 10% of the original price. What will happen? 

Blog Post
Price Is ALWAYS the issue. Price Is NEVER the issue.
Jun 13, 2018 -

Price is awesome. It is part of every sale. Every customer wants to buy at a lower price. Every company (or most at least) wants to sell at higher prices. It’s a universal truth. 

Jun 13, 2018 -

Price is awesome. It is part of every sale. Every customer wants to buy at a lower price. Every company (or most at least) wants to sell at higher prices. It’s a universal truth. 

Blog Post
Value-Based Pricing and Everyday Low Prices (EDLP)
Jun 06, 2018 -

Here’s a challenging question from a reader: “Value-based pricing” has made a buzz in the dialogues of pricing practitioners and academics. Should all companies change their pricing strategy to value-based pricing? What about companies with an everyday low price (EDLP) strategy? My answer, “Yes!” Kind of. 

Jun 06, 2018 -

Here’s a challenging question from a reader: “Value-based pricing” has made a buzz in the dialogues of pricing practitioners and academics. Should all companies change their pricing strategy to value-based pricing? What about companies with an everyday low price (EDLP) strategy? My answer, “Yes!” Kind of. 

Blog Post
Why I Quit Amazon Prime … and It’s Not Their Price Increase
May 31, 2018 -

Amazon Prime has been amazing in my life. For a measly $100 per year, I get free shipping on almost everything I order. But the funny thing is I don’t really care about free shipping itself.   

May 31, 2018 -

Amazon Prime has been amazing in my life. For a measly $100 per year, I get free shipping on almost everything I order. But the funny thing is I don’t really care about free shipping itself.   

Blog Post
Question on Building a Fence in Price Segmentation
May 23, 2018 -

I always enjoy hearing from alumni who have taken the Pragmatic Marketing Price course: I was in your Austin Class last May. It was fantastic, and I had a question on price segmentation for software. 

May 23, 2018 -

I always enjoy hearing from alumni who have taken the Pragmatic Marketing Price course: I was in your Austin Class last May. It was fantastic, and I had a question on price segmentation for software. 

Blog Post
Price Increases: Big and infrequent, or small and annual?
May 16, 2018 -

Amazon just increased the price of Amazon Prime by 20%. Wow! That’s a big jump all at once. The good news is this was the first increase in 4 years. In 2014, they increased the price by 25%. These big price increases must impact their subscriptions. Instead of trying to determine if this latest price increase was good or bad, let’s consider: Should they do 20% all at once or should they have done 5% per year? 

May 16, 2018 -

Amazon just increased the price of Amazon Prime by 20%. Wow! That’s a big jump all at once. The good news is this was the first increase in 4 years. In 2014, they increased the price by 25%. These big price increases must impact their subscriptions. Instead of trying to determine if this latest price increase was good or bad, let’s consider: Should they do 20% all at once or should they have done 5% per year? 

Blog Post
Confused Buyers Don’t Buy—Or Do They?
May 09, 2018 -

An important rule I teach in the Price course is that confused buyers don’t buy. If you have a complex price list, then this is your buyer’s experience. He has a 30-minute break between meetings and picks up your price list to figure out what the company needs. 

May 09, 2018 -

An important rule I teach in the Price course is that confused buyers don’t buy. If you have a complex price list, then this is your buyer’s experience. He has a 30-minute break between meetings and picks up your price list to figure out what the company needs. 

Blog Post
Ability to Pay vs. Willingness to Pay
May 03, 2018 -

In a recent Pragmatic Marketing Price class, one student “corrected” me to say it wasn't willingness to pay that matters in pricing, rather it was ability to pay. It was challenging to change his mind, mostly because he was in the middle of an emotional pricing situation with his son and a local college. 

May 03, 2018 -

In a recent Pragmatic Marketing Price class, one student “corrected” me to say it wasn't willingness to pay that matters in pricing, rather it was ability to pay. It was challenging to change his mind, mostly because he was in the middle of an emotional pricing situation with his son and a local college. 

Blog Post
Pricing Advice to … Everyone
Apr 25, 2018 -

A reader named David asked: “I’ve enjoyed learning more about pricing from reading your articles. Any thoughts about pricing for house painters?” YES! And the advice is for everyone. 

Apr 25, 2018 -

A reader named David asked: “I’ve enjoyed learning more about pricing from reading your articles. Any thoughts about pricing for house painters?” YES! And the advice is for everyone. 

Blog Post
You Must Be Confident of Your Value to Win at High Prices
Mar 29, 2018 - How confident are you and your sales team that your product is worth its price? The answer to that one question is a fantastic predictor of how much you discount your product. People that don’t believe their product is worth it have a very hard time winning at high prices. Instead, they discount to a “reasonable” price. A highly profitable attitude and belief is that my product is so worth its price that I feel sorry for people who don’t buy it. If they bought from the competition, they didn’t make the best decision because I failed to communicate the value well enough. This isn’t a game. This is truth. Are your products that good? Are they that much better than your competitors? If you don’t believe it, you are probably discounting too much. If your products aren’t that good, then that is where you should focus. Listen to your market. Only add new features that buyers would pay for and users would use. Be better than your competitors. When you add the right features long enough, you will gain that confidence. In fact, you will hear your own users tell you stories that strengthen your confidence. If you’re not confident, […]
Mar 29, 2018 - How confident are you and your sales team that your product is worth its price? The answer to that one question is a fantastic predictor of how much you discount your product. People that don’t believe their product is worth it have a very hard time winning at high prices. Instead, they discount to a “reasonable” price. A highly profitable attitude and belief is that my product is so worth its price that I feel sorry for people who don’t buy it. If they bought from the competition, they didn’t make the best decision because I failed to communicate the value well enough. This isn’t a game. This is truth. Are your products that good? Are they that much better than your competitors? If you don’t believe it, you are probably discounting too much. If your products aren’t that good, then that is where you should focus. Listen to your market. Only add new features that buyers would pay for and users would use. Be better than your competitors. When you add the right features long enough, you will gain that confidence. In fact, you will hear your own users tell you stories that strengthen your confidence. If you’re not confident, […]
Blog Post
Comments on “Three Rules for Making a Company Truly Great.” (Hint, It’s About Pricing.)
Mar 14, 2018 - I just read for the first time a Harvard Business Review article, “Three Rules for Making a Company Truly Great,” by Michael Raynor and Mumtaz Ahmed (April 2013). The rules come from a statistical analysis of thousands of companies over decades. Here are the three rules as written in the article: 1. Better before cheaper—in other words, compete on differentiators other than price. 2. Revenue before cost—that is, prioritize increasing revenue over reducing costs. 3. There are no other rules—so change anything you must to follow Rules 1 and 2. When I read these three rules, here is what I read: 1. Pricing is important. 2. Pricing is important. 3. Pricing is the only thing that’s important. (Exaggeration?) Let’s be a little clearer on why these all say “pricing is important”: Better before cheaper. This says, “Don’t compete on price.” Build products that are better than the competition. The price you can achieve in a competitive market depends on only two things: the price your competitor charges and how much better you are than your competitor. If you’re not better, then you are probably competing on price. The authors claim companies should be focused on making products, services or support […]
Mar 14, 2018 - I just read for the first time a Harvard Business Review article, “Three Rules for Making a Company Truly Great,” by Michael Raynor and Mumtaz Ahmed (April 2013). The rules come from a statistical analysis of thousands of companies over decades. Here are the three rules as written in the article: 1. Better before cheaper—in other words, compete on differentiators other than price. 2. Revenue before cost—that is, prioritize increasing revenue over reducing costs. 3. There are no other rules—so change anything you must to follow Rules 1 and 2. When I read these three rules, here is what I read: 1. Pricing is important. 2. Pricing is important. 3. Pricing is the only thing that’s important. (Exaggeration?) Let’s be a little clearer on why these all say “pricing is important”: Better before cheaper. This says, “Don’t compete on price.” Build products that are better than the competition. The price you can achieve in a competitive market depends on only two things: the price your competitor charges and how much better you are than your competitor. If you’re not better, then you are probably competing on price. The authors claim companies should be focused on making products, services or support […]
Blog Post
Why You Use Cost-Plus Pricing
Mar 06, 2018 - Let’s create a simple imaginary product and market. The product, a widget, costs $10 to make. The CFO has determined the company needs 50% margin to keep the investors happy. What price should we charge? The obvious answer is $20. That’s also the easy answer. It just isn’t the best answer. To find the best answer we need to know how much our buyers are willing to pay. In our simplistic market, we have three potential buyers. Buyer A is willing to pay $15, Buyer B is willing to pay $25, Buyer C is willing to pay $50. Does that information change your price? It should! If we only get to set one price, there are three obvious choices. Price at $15, sell 3 units, make profit of 3*($15 – 10) = $15 and margin of 5/15 = 33%. Price at $25, sell 2 units, make profit of 2*($25 – 10) = $30 and margin of 15/25 = 60%. Price at $50, sell 1 unit, make profit of 1*($50 – 10) = $40 and margin of 40/50 = 80%. By the way, the number of units we sell is determined by counting the number of buyers who would pay the […]
Mar 06, 2018 - Let’s create a simple imaginary product and market. The product, a widget, costs $10 to make. The CFO has determined the company needs 50% margin to keep the investors happy. What price should we charge? The obvious answer is $20. That’s also the easy answer. It just isn’t the best answer. To find the best answer we need to know how much our buyers are willing to pay. In our simplistic market, we have three potential buyers. Buyer A is willing to pay $15, Buyer B is willing to pay $25, Buyer C is willing to pay $50. Does that information change your price? It should! If we only get to set one price, there are three obvious choices. Price at $15, sell 3 units, make profit of 3*($15 – 10) = $15 and margin of 5/15 = 33%. Price at $25, sell 2 units, make profit of 2*($25 – 10) = $30 and margin of 15/25 = 60%. Price at $50, sell 1 unit, make profit of 1*($50 – 10) = $40 and margin of 40/50 = 80%. By the way, the number of units we sell is determined by counting the number of buyers who would pay the […]
Blog Post
Value Conversations for Product Teams
Feb 27, 2018 - I first heard the term “value conversation” when working with folks from VeraSage Institute. They are evangelists for value-based pricing to professional services companies. They battle pricing by the hour and advocate for pricing by the job based on the value you deliver. To do that well, you need to have the value conversation with the customer. How much value are you able to deliver? A little research shows that the “value conversation” is used a lot in other sales situations. Successful salespeople communicate the value of a product in the terms the buyer would use and believe. This is best done by talking to the buyer about how much value he would receive. Value conversations are great for salespeople. They are even more important for product people. As product people, we have to build and market successful products, and the only way products succeed is if we create and communicate value. Hence, the importance of value conversations. When defining your next product, of course you need to know what market problems you will solve—but do you know the value of solving them? Not every buyer is identical, but listen to enough buyers and you will get a feeling for […]
Feb 27, 2018 - I first heard the term “value conversation” when working with folks from VeraSage Institute. They are evangelists for value-based pricing to professional services companies. They battle pricing by the hour and advocate for pricing by the job based on the value you deliver. To do that well, you need to have the value conversation with the customer. How much value are you able to deliver? A little research shows that the “value conversation” is used a lot in other sales situations. Successful salespeople communicate the value of a product in the terms the buyer would use and believe. This is best done by talking to the buyer about how much value he would receive. Value conversations are great for salespeople. They are even more important for product people. As product people, we have to build and market successful products, and the only way products succeed is if we create and communicate value. Hence, the importance of value conversations. When defining your next product, of course you need to know what market problems you will solve—but do you know the value of solving them? Not every buyer is identical, but listen to enough buyers and you will get a feeling for […]
Blog Post
Why Isn’t Pricing More Valued in Companies?
Feb 19, 2018 - A reader asked, “Why isn’t pricing more valued in companies?” What a fabulous question. Although I haven’t seen the research, my experience leads me to believe there are three reasons, all huge. First, many companies don’t know the power of pricing. Alternatively, they don’t know that pricing can have a large positive impact on their profitability. They think they are doing a good job already. My opinion: companies without an executive-led pricing initiative are certainly leaving a ton of money on the table. Second, executives may understand the power of pricing but don’t know how to tackle it. Face it, pricing is hard. Almost every department cares a lot. It’s the topic of internal arguments. Some departments think it’s too high; others think it’s too low. The systems aren’t in place to implement new pricing strategies. Very few executives are pricing experts. Executives will solve problems they know how to solve. Third, pricing is risky. Why would a company with a profitable business risk it by dramatically changing its pricing? The thing is, pricing doesn’t have to be big dramatic changes. There are many tweaks that can be made to pricing strategy that can add to profitability. However, unless there […]
Feb 19, 2018 - A reader asked, “Why isn’t pricing more valued in companies?” What a fabulous question. Although I haven’t seen the research, my experience leads me to believe there are three reasons, all huge. First, many companies don’t know the power of pricing. Alternatively, they don’t know that pricing can have a large positive impact on their profitability. They think they are doing a good job already. My opinion: companies without an executive-led pricing initiative are certainly leaving a ton of money on the table. Second, executives may understand the power of pricing but don’t know how to tackle it. Face it, pricing is hard. Almost every department cares a lot. It’s the topic of internal arguments. Some departments think it’s too high; others think it’s too low. The systems aren’t in place to implement new pricing strategies. Very few executives are pricing experts. Executives will solve problems they know how to solve. Third, pricing is risky. Why would a company with a profitable business risk it by dramatically changing its pricing? The thing is, pricing doesn’t have to be big dramatic changes. There are many tweaks that can be made to pricing strategy that can add to profitability. However, unless there […]
Blog Post
The Power of Discounts
Feb 08, 2018 - I wish everyone made decisions rationally. OK, I’d be happy if I could make decisions rationally. Last night while having dinner with my wife I caught myself being irrational … again. We went to our local sports bar at halftime of the Super Bowl. This is a place we eat all the time. The prices are reasonable enough that I just order what I want, without regard to price. I was thinking about some wings, but decided against them. Instead, I chose a Southwest chicken salad (and a beer, just so you don’t think I’m that healthy). The waiter took our order and then said, “Oh, all of our appetizers are half price during the Super Bowl. Would you like any?” Instantly I ordered wings. Ouch!!! Luckily, the waiter said, “Our wings aren’t on the appetizer menu. Sorry.” Whew. I ended up not ordering them. Then I thought about what I had just done, or not done. I was completely irrational. I didn’t even know the price of the wings. I didn’t know how much I would be saving. I just wanted the discount. It wasn’t a rational decision. Instead, the discount made me do it. We (I?) have been […]
Feb 08, 2018 - I wish everyone made decisions rationally. OK, I’d be happy if I could make decisions rationally. Last night while having dinner with my wife I caught myself being irrational … again. We went to our local sports bar at halftime of the Super Bowl. This is a place we eat all the time. The prices are reasonable enough that I just order what I want, without regard to price. I was thinking about some wings, but decided against them. Instead, I chose a Southwest chicken salad (and a beer, just so you don’t think I’m that healthy). The waiter took our order and then said, “Oh, all of our appetizers are half price during the Super Bowl. Would you like any?” Instantly I ordered wings. Ouch!!! Luckily, the waiter said, “Our wings aren’t on the appetizer menu. Sorry.” Whew. I ended up not ordering them. Then I thought about what I had just done, or not done. I was completely irrational. I didn’t even know the price of the wings. I didn’t know how much I would be saving. I just wanted the discount. It wasn’t a rational decision. Instead, the discount made me do it. We (I?) have been […]
Blog Post
How Do You Price Long-Term Contracts When Cost Fluctuations Are Involved?
Jan 23, 2018 - A reader recently reached out: “It would be great to hear your thoughts on the impact of currency fluctuations on pricing in B2B market with long-term contracts. How about oil and exchange rate variations?” Pricing is about willingness to pay, not about costs. But the other side is: What is your company willing to accept to do a piece of business? For example, if a buyer is only willing to pay something less than your costs to manufacture, then you are not willing to accept that piece of business. This is complicated when you sign a long-term contract at a fixed price because your costs aren’t constant. Commodity prices like oil or gold go up and down. Currencies fluctuate all over the place, a big problem when you do business with companies in other countries. We can simplify this pricing problem into a single word: risk. Who is willing to take the risk? If the seller signs a long-term contract at a fixed price, then the seller is taking the risk. If costs go up, then the seller makes less profit or even loses money on the deal. If you want to shift the risk to the buyer, then you […]
Jan 23, 2018 - A reader recently reached out: “It would be great to hear your thoughts on the impact of currency fluctuations on pricing in B2B market with long-term contracts. How about oil and exchange rate variations?” Pricing is about willingness to pay, not about costs. But the other side is: What is your company willing to accept to do a piece of business? For example, if a buyer is only willing to pay something less than your costs to manufacture, then you are not willing to accept that piece of business. This is complicated when you sign a long-term contract at a fixed price because your costs aren’t constant. Commodity prices like oil or gold go up and down. Currencies fluctuate all over the place, a big problem when you do business with companies in other countries. We can simplify this pricing problem into a single word: risk. Who is willing to take the risk? If the seller signs a long-term contract at a fixed price, then the seller is taking the risk. If costs go up, then the seller makes less profit or even loses money on the deal. If you want to shift the risk to the buyer, then you […]
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Surge Pricing Done Right
Jan 17, 2018 -     We see too many examples of surge pricing done poorly, with companies raising prices during peak times. Finally, there is an example of it done well in a post from The Week. The ONLY difference: they are lowering prices during off-peak hours rather than raising pricing during peak. Notice the tone of the article is complementary. Other companies are watching to see if it works. If you have surges in demand and want to price based on time, start by reducing prices for off-peak hours.Later you can raise all prices at the same time, which will seem more fair.  
Jan 17, 2018 -     We see too many examples of surge pricing done poorly, with companies raising prices during peak times. Finally, there is an example of it done well in a post from The Week. The ONLY difference: they are lowering prices during off-peak hours rather than raising pricing during peak. Notice the tone of the article is complementary. Other companies are watching to see if it works. If you have surges in demand and want to price based on time, start by reducing prices for off-peak hours.Later you can raise all prices at the same time, which will seem more fair.  
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Become a Pricing Champion!
Jan 09, 2018 - I love pricing. I love the fact that this is a measure of how well a company designs, builds and markets a product. I love the fact that it’s a number. It’s not squishy. I love the fact that you can measure the effects of changes. But what I love most of all is the power pricing has to drive increased profitability. Pricing is amazingly powerful … when there’s a champion. One of the biggest problems with pricing is that nobody in the company owns all of the pieces. Some parts are owned by product management or marketing. Some are owned by sales and some by finance. And some are owned by the executive team or whoever has profit and loss responsibility. It seems like everybody has their finger in the pricing pie. With so many people involved, it is challenging to make changes. Maybe we all meet and change a price or two, but try to change the systems or methodologies we use. Or worse, try to modify the pricing model. Ouch. It is nearly impossible to get all of these groups aligned to where they agree to make any significant change. Enter the PRICING CHAMPION. Ta Da!!! (Did […]
Jan 09, 2018 - I love pricing. I love the fact that this is a measure of how well a company designs, builds and markets a product. I love the fact that it’s a number. It’s not squishy. I love the fact that you can measure the effects of changes. But what I love most of all is the power pricing has to drive increased profitability. Pricing is amazingly powerful … when there’s a champion. One of the biggest problems with pricing is that nobody in the company owns all of the pieces. Some parts are owned by product management or marketing. Some are owned by sales and some by finance. And some are owned by the executive team or whoever has profit and loss responsibility. It seems like everybody has their finger in the pricing pie. With so many people involved, it is challenging to make changes. Maybe we all meet and change a price or two, but try to change the systems or methodologies we use. Or worse, try to modify the pricing model. Ouch. It is nearly impossible to get all of these groups aligned to where they agree to make any significant change. Enter the PRICING CHAMPION. Ta Da!!! (Did […]
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Failed Price Segmentation (Dynamic Pricing)
Jan 04, 2018 - According to an article in The Mercury, Village Cinemas in Australia is testing dynamic pricing, and it’s not going well. It has implemented a $1 increase in ticket prices and has increased prices on many concessions after 5 p.m. on Fridays and Saturdays, the busiest times for the movie theaters. Many moviegoers are complaining on social media, and this article has increased awareness and dissatisfaction. What did Village Cinemas do wrong? From a price segmentation point of view, the idea is spot on. People who go to the movies on Friday or Saturday night likely have a higher willingness to pay than people who go at other times—and the movie theater should try to capture it. However, its implementation could have been improved. An internal memo from the cinema was shared on Reddit. If a customer asks about the new pricing, employees should say, “Village Cinemas have commenced a pilot investigating dynamic pricing models at different times at selected sites across the summer period. Village Cinemas is committed to provide affordable cinema options through our Vrewards offers and discounts, promotional pricing and tailored screening programs.” OUCH! Imagine someone said that to you. Sounds like a profit grab, and it will make […]
Jan 04, 2018 - According to an article in The Mercury, Village Cinemas in Australia is testing dynamic pricing, and it’s not going well. It has implemented a $1 increase in ticket prices and has increased prices on many concessions after 5 p.m. on Fridays and Saturdays, the busiest times for the movie theaters. Many moviegoers are complaining on social media, and this article has increased awareness and dissatisfaction. What did Village Cinemas do wrong? From a price segmentation point of view, the idea is spot on. People who go to the movies on Friday or Saturday night likely have a higher willingness to pay than people who go at other times—and the movie theater should try to capture it. However, its implementation could have been improved. An internal memo from the cinema was shared on Reddit. If a customer asks about the new pricing, employees should say, “Village Cinemas have commenced a pilot investigating dynamic pricing models at different times at selected sites across the summer period. Village Cinemas is committed to provide affordable cinema options through our Vrewards offers and discounts, promotional pricing and tailored screening programs.” OUCH! Imagine someone said that to you. Sounds like a profit grab, and it will make […]
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The Goal Is Crucial to Pricing
Dec 19, 2017 -

Sometimes, I have to be reminded of the obvious. Duh! Earlier, I was coaching a company on pricing. As I was listening to descriptions of their customers, their channels and the problems they solve, my mind was swirling with ideas. Let me tell you, these ideas were brilliant. They were amazing … almost.

Dec 19, 2017 -

Sometimes, I have to be reminded of the obvious. Duh! Earlier, I was coaching a company on pricing. As I was listening to descriptions of their customers, their channels and the problems they solve, my mind was swirling with ideas. Let me tell you, these ideas were brilliant. They were amazing … almost.

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Should You Use Freemium? Do the Math!
Nov 28, 2017 - Students and readers often ask if they should use a freemium pricing model. In the past, I’ve used the following rules to help with that decision.   Is it a low cost to serve the user? (Usually for software or content.) Can you offer real value to your free users? Is there a segment willing to pay you for more functionality? Does your market have network effects where the value to one user increases the more other users participate? (Think social media or peer-to-peer games.) Jason Lemkin in his blogpost, “Why You Need 50 Million Active Users for Freemium to Actually Work,” points out a fifth. 5. Is the market big enough? Please read his article. It’s brilliant and he lives in this world. Here is the gist. If you want to build a $100M business with a freemium offering that brings in an average of $100/year from the paying customers and you have a 2% conversion rate, then you need 50 million active users. 50 million active users is the exception, not the rule. This is hard to achieve. So you’re thinking, I will get more than a 2% conversion rate. Not likely. When you can find the numbers […]
Nov 28, 2017 - Students and readers often ask if they should use a freemium pricing model. In the past, I’ve used the following rules to help with that decision.   Is it a low cost to serve the user? (Usually for software or content.) Can you offer real value to your free users? Is there a segment willing to pay you for more functionality? Does your market have network effects where the value to one user increases the more other users participate? (Think social media or peer-to-peer games.) Jason Lemkin in his blogpost, “Why You Need 50 Million Active Users for Freemium to Actually Work,” points out a fifth. 5. Is the market big enough? Please read his article. It’s brilliant and he lives in this world. Here is the gist. If you want to build a $100M business with a freemium offering that brings in an average of $100/year from the paying customers and you have a 2% conversion rate, then you need 50 million active users. 50 million active users is the exception, not the rule. This is hard to achieve. So you’re thinking, I will get more than a 2% conversion rate. Not likely. When you can find the numbers […]
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Why Do Companies Compete Harder on Black Friday?
Nov 24, 2017 - The easy answer is because there is so much buying going on that day, companies do not want to miss out on their share.  But that doesn’t feel very complete.  Don’t companies care about winning business in March too?  Yet they don’t compete as ferociously in March.  Why not? To be honest, I struggled with this question.  For years I hadn’t had an explanation that felt right yet.  Earlier this year I recorded a podcast with Rebecca called, Prisoner’s Dilemma (and what the heck it has to do with pricing). I won’t go into a review of the prisoner’s dilemma, but here is a quick summary of the outcome.  When companies compete, they each have an individual short term incentive to lower price to steal market share from the others.  However, since the others would probably just lower their price too, nobody wins.  Hence, companies tend to not price aggressively because they know it won’t really help them in the long run.  This is called implicit collusion.  When this breaks down, firms find themselves in price wars which destroy profits for the industry. Rebecca, being the phenomenal podcast host that she is, asked for examples of when this breaks down. […]
Nov 24, 2017 - The easy answer is because there is so much buying going on that day, companies do not want to miss out on their share.  But that doesn’t feel very complete.  Don’t companies care about winning business in March too?  Yet they don’t compete as ferociously in March.  Why not? To be honest, I struggled with this question.  For years I hadn’t had an explanation that felt right yet.  Earlier this year I recorded a podcast with Rebecca called, Prisoner’s Dilemma (and what the heck it has to do with pricing). I won’t go into a review of the prisoner’s dilemma, but here is a quick summary of the outcome.  When companies compete, they each have an individual short term incentive to lower price to steal market share from the others.  However, since the others would probably just lower their price too, nobody wins.  Hence, companies tend to not price aggressively because they know it won’t really help them in the long run.  This is called implicit collusion.  When this breaks down, firms find themselves in price wars which destroy profits for the industry. Rebecca, being the phenomenal podcast host that she is, asked for examples of when this breaks down. […]
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A Fantastic Example of Price Segmentation Using Distribution
Nov 15, 2017 -

Everyone who reads this blog knows that we should use price segmentation to capture more from those willing to pay more, yet still win from those only willing to pay less.  

Nov 15, 2017 -

Everyone who reads this blog knows that we should use price segmentation to capture more from those willing to pay more, yet still win from those only willing to pay less.  

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What Zillow Can Teach You About Your Pricing Analytics
Nov 07, 2017 -

In a Zillow Porchlight article, Zillow describes (barely) how they calculate the value of a home and how they are trying to become more accurate.

Nov 07, 2017 -

In a Zillow Porchlight article, Zillow describes (barely) how they calculate the value of a home and how they are trying to become more accurate.

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American Airlines Deters Competition with Price Strategy
Oct 31, 2017 -

The first two sentences in a Skift.com article titled “American Airlines Plans to Keep Prices Low on Competitive Routes” are: American Airlines Group Inc. will “absolutely, positively” match discount fares from low-cost rivals, chief executive officer Doug Parker said, signaling no end in sight for a price war that has knocked down industry shares this summer. “We price our product to match the competition,” Parker told reporters at a conference in Fort Worth, Texas. “We always have, we always will.” 

Oct 31, 2017 -

The first two sentences in a Skift.com article titled “American Airlines Plans to Keep Prices Low on Competitive Routes” are: American Airlines Group Inc. will “absolutely, positively” match discount fares from low-cost rivals, chief executive officer Doug Parker said, signaling no end in sight for a price war that has knocked down industry shares this summer. “We price our product to match the competition,” Parker told reporters at a conference in Fort Worth, Texas. “We always have, we always will.” 

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Surge Pricing and Fairness
Oct 25, 2017 -

Several people have asked me to comment on the recent New York Times article titled “Why Surge Prices Make Us So Mad: What Springsteen, Home Depot and a Nobel Winner Know.” Here goes.

Oct 25, 2017 -

Several people have asked me to comment on the recent New York Times article titled “Why Surge Prices Make Us So Mad: What Springsteen, Home Depot and a Nobel Winner Know.” Here goes.

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Did Apple Make a Portfolio Mistake with the iPhone 8/X?
Oct 10, 2017 -

Apple announced both the iPhone 8 and the iPhone X at the same time. Was this a mistake? Time will surely tell, but here are some thoughts from a pricing guy.

Oct 10, 2017 -

Apple announced both the iPhone 8 and the iPhone X at the same time. Was this a mistake? Time will surely tell, but here are some thoughts from a pricing guy.

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Ticketmaster’s Verified Fan Gives Economic Surplus to Fans
Oct 03, 2017 -

What do Taylor Swift, Bruce Springsteen and Hamilton on Broadway all have in common? They are using Ticketmaster’s Verified Fan program to keep the scalpers from making a fortune on their events...

Oct 03, 2017 -

What do Taylor Swift, Bruce Springsteen and Hamilton on Broadway all have in common? They are using Ticketmaster’s Verified Fan program to keep the scalpers from making a fortune on their events...

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Gross Margin Is Almost Always Irrelevant in Pricing
Sep 28, 2017 -

If you’re a regular reader or a pricing aficionado (aren’t we all?) then you already know that costs are ALMOST always irrelevant to pricing. The single most important driver in pricing is what your buyers are willing to pay. Your buyers don’t care what your product costs to make. They only decide if the value they receive is more than the price you charge.u

Sep 28, 2017 -

If you’re a regular reader or a pricing aficionado (aren’t we all?) then you already know that costs are ALMOST always irrelevant to pricing. The single most important driver in pricing is what your buyers are willing to pay. Your buyers don’t care what your product costs to make. They only decide if the value they receive is more than the price you charge.u

Blog Post
Gouging Is Good, But Not Advised
Sep 20, 2017 -

I recently posted a blog on how some of the airlines were being good corporate citizens and capping the price of their flights from Florida, just before Hurricane Irma. Huge kudos to them. The takeaway of the post was to think about the lifetime value of your customer...

Sep 20, 2017 -

I recently posted a blog on how some of the airlines were being good corporate citizens and capping the price of their flights from Florida, just before Hurricane Irma. Huge kudos to them. The takeaway of the post was to think about the lifetime value of your customer...

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Deciphering “Value Range Pricing” in Real Estate
Sep 13, 2017 -

There’s a “new” concept in real estate: Instead of publishing an asking price, you publish a range. For example, instead of listing a house for $349,900, you might list it for $339,900 – $375,000. http://www.realtor.com/advice/sell/what-is-value-range-pricing-real-estate/ To understand this effect, we first have to think about a house with only one asking price...

Sep 13, 2017 -

There’s a “new” concept in real estate: Instead of publishing an asking price, you publish a range. For example, instead of listing a house for $349,900, you might list it for $339,900 – $375,000. http://www.realtor.com/advice/sell/what-is-value-range-pricing-real-estate/ To understand this effect, we first have to think about a house with only one asking price...

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Airline Pricing, Hurricane Irma and Fairness
Sep 08, 2017 -

Southern Florida is evacuating.  Most of Florida is evacuating.  My parents as far North as Charleston, South Carolina are evacuating. Hurricane Irma is a big deal.   For many people, their evacuation plans include flying somewhere safe. This could be a windfall for the airlines...

Sep 08, 2017 -

Southern Florida is evacuating.  Most of Florida is evacuating.  My parents as far North as Charleston, South Carolina are evacuating. Hurricane Irma is a big deal.   For many people, their evacuation plans include flying somewhere safe. This could be a windfall for the airlines...

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The Power of Corporate Strategy: Amazon and Whole Foods
Aug 28, 2017 - The big news: Amazon will lower prices at Whole Foods on day one. To anyone who spends time watching Amazon, this will not be a surprise. However, it is a great opportunity to learn a lesson: Pricing must be consistent with corporate strategy. Amazon’s corporate strategy is to be the one-stop shop for retail, and a key part of that is to make sure everyone perceives Amazon’s prices as low. Whole Foods, often nicknamed “Whole Paycheck,” is the opposite of that perception. The winner? Amazon’s corporate strategy. The company has announced it is lowering prices at Whole Foods on the day the deal closes. As a pricing guy, I often say that the only good reason for lowering prices is to match competitors’ price decreases. This is an exception. Because Amazon is integrating Whole Foods into its normal business, using the brick and mortar stores to help with delivery and returns and beefing up the grocery business, Whole Foods must conform to the Amazon price brand, and its corporate strategy. An alternative could have been if Amazon wanted to leave Whole Foods as a wholly-owned subsidiary, it could have left prices high and reaped the profits. There were likely some […]
Aug 28, 2017 - The big news: Amazon will lower prices at Whole Foods on day one. To anyone who spends time watching Amazon, this will not be a surprise. However, it is a great opportunity to learn a lesson: Pricing must be consistent with corporate strategy. Amazon’s corporate strategy is to be the one-stop shop for retail, and a key part of that is to make sure everyone perceives Amazon’s prices as low. Whole Foods, often nicknamed “Whole Paycheck,” is the opposite of that perception. The winner? Amazon’s corporate strategy. The company has announced it is lowering prices at Whole Foods on the day the deal closes. As a pricing guy, I often say that the only good reason for lowering prices is to match competitors’ price decreases. This is an exception. Because Amazon is integrating Whole Foods into its normal business, using the brick and mortar stores to help with delivery and returns and beefing up the grocery business, Whole Foods must conform to the Amazon price brand, and its corporate strategy. An alternative could have been if Amazon wanted to leave Whole Foods as a wholly-owned subsidiary, it could have left prices high and reaped the profits. There were likely some […]
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A Which One Decision in Action
Aug 16, 2017 - Robert Smith, the owner of a few car dealerships, had an amazing answer on Quora to the question, “How much can a person usually negotiate off of a brand new car?” He doesn’t directly answer the question, but he does describe how to buy a new car. His answer was basically to say to the dealer, “I’m looking at several new cars. Another dealership offered me $100 over invoice, but I like your car better. Will you match the deal?” Of course, ask to see the invoice. (To be fair to Robert he goes into more detail, but this is enough for our pricing lesson.) Why does this work? Because car dealerships are competitive, but mostly because you are making a which one decision. You are deciding which car to buy or even which dealership to go to. And, you are letting the car dealer know that you have other alternatives that are almost as good as theirs. Now let’s assume we own a new car dealership. We are selling a product that has very close competition. Buyers come into our dealership saying they will do the deal at $100 over invoice, so how can we win that business at […]
Aug 16, 2017 - Robert Smith, the owner of a few car dealerships, had an amazing answer on Quora to the question, “How much can a person usually negotiate off of a brand new car?” He doesn’t directly answer the question, but he does describe how to buy a new car. His answer was basically to say to the dealer, “I’m looking at several new cars. Another dealership offered me $100 over invoice, but I like your car better. Will you match the deal?” Of course, ask to see the invoice. (To be fair to Robert he goes into more detail, but this is enough for our pricing lesson.) Why does this work? Because car dealerships are competitive, but mostly because you are making a which one decision. You are deciding which car to buy or even which dealership to go to. And, you are letting the car dealer know that you have other alternatives that are almost as good as theirs. Now let’s assume we own a new car dealership. We are selling a product that has very close competition. Buyers come into our dealership saying they will do the deal at $100 over invoice, so how can we win that business at […]
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Buy NOW! The Power of Limited-Time Offers
Jul 25, 2017 - It’s all about FOMO, the fear of missing out. Limited-time offers are common and effective at trade shows. Let’s first put ourselves in the mind of a buyer. The buyer probably only goes to this trade show once a year. He sees something he likes and notices that he can get a big discount if he buys today. He is unlikely to see this vendor again for at least a year, if ever. He decides to purchase. This is true even if he doesn’t really want or need the product right now; he might in the near future. It’s the fear of not finding the deal later that prompts the impulse purchase. I’ve certainly fallen prey to this tactic. I justify it logically saying it’s the best deal I’ll find on this product, even though I may not need it. I purchase it anyway. This also makes sense for the seller. They create a sense of FOMO, usually by setting a high list price on their products and then offering discounts at the right time. They also need to provide a strong incentive to purchase immediately, otherwise the buyer won’t feel FOMO and may not purchase. Let’s look through a […]
Jul 25, 2017 - It’s all about FOMO, the fear of missing out. Limited-time offers are common and effective at trade shows. Let’s first put ourselves in the mind of a buyer. The buyer probably only goes to this trade show once a year. He sees something he likes and notices that he can get a big discount if he buys today. He is unlikely to see this vendor again for at least a year, if ever. He decides to purchase. This is true even if he doesn’t really want or need the product right now; he might in the near future. It’s the fear of not finding the deal later that prompts the impulse purchase. I’ve certainly fallen prey to this tactic. I justify it logically saying it’s the best deal I’ll find on this product, even though I may not need it. I purchase it anyway. This also makes sense for the seller. They create a sense of FOMO, usually by setting a high list price on their products and then offering discounts at the right time. They also need to provide a strong incentive to purchase immediately, otherwise the buyer won’t feel FOMO and may not purchase. Let’s look through a […]
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When Discounting Makes Sense
Jun 28, 2017 - Hi Mark, I took the Price class with you in early 2016 and absolutely loved it. I apply what I learned from you about value to everything I do professionally and as a consumer. Being in product management for only a short time, I never grasped the power of pricing; it is now my favorite part of product management. I have a problem on pricing within my company that I have not been able to solve, and I hope you can offer a suggestion. We sell a monthly, subscription-based product. We discount heavily, do not provide packages and do volume discounts. After taking Price, I knew packaging was our answer to effectively end discounting and increase profitability. But here is where it gets tricky: We sell the same product to two very different market segments. The buyer in segment one views us as a will I product, with little price sensitivity. This segment uses the least amount of product features and may only buy one license. They may also sign deals as long as five or six years. The buyer in segment two views us as a which one product, and is price sensitive. This segment uses most of the […]
Jun 28, 2017 - Hi Mark, I took the Price class with you in early 2016 and absolutely loved it. I apply what I learned from you about value to everything I do professionally and as a consumer. Being in product management for only a short time, I never grasped the power of pricing; it is now my favorite part of product management. I have a problem on pricing within my company that I have not been able to solve, and I hope you can offer a suggestion. We sell a monthly, subscription-based product. We discount heavily, do not provide packages and do volume discounts. After taking Price, I knew packaging was our answer to effectively end discounting and increase profitability. But here is where it gets tricky: We sell the same product to two very different market segments. The buyer in segment one views us as a will I product, with little price sensitivity. This segment uses the least amount of product features and may only buy one license. They may also sign deals as long as five or six years. The buyer in segment two views us as a which one product, and is price sensitive. This segment uses most of the […]
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Managing a Pricing Portfolio
Jun 01, 2017 - Hi Mark, I’ve been a pricing practitioner for many years now, with experience in several industries on the individual contributor and manager level. It has always allowed me to dive into the business and influence revenue in a positive way by becoming engaged in the business and seeking out opportunities for price/process/strategy improvement. An opportunity is shaping up to move into a pricing director role, with responsibility for several business units. These all operate with their own management, in different markets, with different products and pricing. If this opportunity materializes, I will have less time to dive in and understand the business firsthand, which would be a big change. A portfolio of situations will present itself to me. How do I manage this portfolio? What criteria should I understand about the market and the pricing strategies, processes and results to get a lay of the land? How should I prioritize? Thank you, M Hi M, First, congratulations. Obviously, you’ve done a great job as an individual contributor. You’ve had a chance to implement several pricing techniques. Now things will change. As director of pricing, you are more of a consultant, coach and educator to different departments within your company. In […]
Jun 01, 2017 - Hi Mark, I’ve been a pricing practitioner for many years now, with experience in several industries on the individual contributor and manager level. It has always allowed me to dive into the business and influence revenue in a positive way by becoming engaged in the business and seeking out opportunities for price/process/strategy improvement. An opportunity is shaping up to move into a pricing director role, with responsibility for several business units. These all operate with their own management, in different markets, with different products and pricing. If this opportunity materializes, I will have less time to dive in and understand the business firsthand, which would be a big change. A portfolio of situations will present itself to me. How do I manage this portfolio? What criteria should I understand about the market and the pricing strategies, processes and results to get a lay of the land? How should I prioritize? Thank you, M Hi M, First, congratulations. Obviously, you’ve done a great job as an individual contributor. You’ve had a chance to implement several pricing techniques. Now things will change. As director of pricing, you are more of a consultant, coach and educator to different departments within your company. In […]
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Value Conversations in Pricing
May 18, 2017 - Your company has defined and built a product. Your marketing team promotes it. Your sales team is looking for and persuading buyers to become customers. Ideally, this whole process runs smoothly because you started out by listening to the market. But much of the time this isn’t the case. Often companies build products because someone thought it was a good idea. By the way, it might have been a good idea. Regardless of how you got here, now you have a product and some people are buying it. That’s excellent. The question now is are you charging enough? Are you charging too much? This is where a value conversation provides insight into your pricing. The best time to have a value conversation for this purpose is during your win/loss visits. If you won a deal, the customer received more value from your product that your price. Otherwise they wouldn’t have purchased. It is possible they received a LOT more value and there might have been an opportunity to charge more. We should be asking them. Here are a set of questions you might ask: Which of our capabilities was most important to you? How will you use it? What problem […]
May 18, 2017 - Your company has defined and built a product. Your marketing team promotes it. Your sales team is looking for and persuading buyers to become customers. Ideally, this whole process runs smoothly because you started out by listening to the market. But much of the time this isn’t the case. Often companies build products because someone thought it was a good idea. By the way, it might have been a good idea. Regardless of how you got here, now you have a product and some people are buying it. That’s excellent. The question now is are you charging enough? Are you charging too much? This is where a value conversation provides insight into your pricing. The best time to have a value conversation for this purpose is during your win/loss visits. If you won a deal, the customer received more value from your product that your price. Otherwise they wouldn’t have purchased. It is possible they received a LOT more value and there might have been an opportunity to charge more. We should be asking them. Here are a set of questions you might ask: Which of our capabilities was most important to you? How will you use it? What problem […]
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Should You Lower Your Price?
May 11, 2017 - My first instinct is that you should not lower your price. Many companies want to lower price thinking they can win more market share. Rarely does this work out well. If you lower your price to win share, what will your competitor do? Probably lower price too. In the end, you won’t gain market share. Instead, you’ll simply reduce profits for both you and your competitor. Yet, sometimes it makes sense to lower price. When your competitor lowers their price you probably need to respond, but respond thoughtfully. After all, if you’re using value-based pricing, you’ve set your price to be some amount higher or lower than your competitor’s in order to capture the differential value. If they lower their price, you will need to lower yours to keep the same relative price position. It’s all about how your customers decide between your product and your competitor’s product. This is a great time to think through your price segmentation. Is it possible to lower your price only on the segment that your competitor serves while not lowering your price on your other segments? This is what the big airlines did when Southwest started flying their routes. They lowered their prices […]
May 11, 2017 - My first instinct is that you should not lower your price. Many companies want to lower price thinking they can win more market share. Rarely does this work out well. If you lower your price to win share, what will your competitor do? Probably lower price too. In the end, you won’t gain market share. Instead, you’ll simply reduce profits for both you and your competitor. Yet, sometimes it makes sense to lower price. When your competitor lowers their price you probably need to respond, but respond thoughtfully. After all, if you’re using value-based pricing, you’ve set your price to be some amount higher or lower than your competitor’s in order to capture the differential value. If they lower their price, you will need to lower yours to keep the same relative price position. It’s all about how your customers decide between your product and your competitor’s product. This is a great time to think through your price segmentation. Is it possible to lower your price only on the segment that your competitor serves while not lowering your price on your other segments? This is what the big airlines did when Southwest started flying their routes. They lowered their prices […]
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Can Price Be a Distinctive Competency?
May 04, 2017 - A distinctive competency is something you are really good at and your competition isn’t. Think of this as a unique core competency that you have in the marketplace. It is possible to have more than one distinctive competency, but in my conversations with companies, it’s more common that companies haven’t found or created a distinctive competency. Distinctive competencies are rarely features. Product features are often copied quickly, but distinctive competencies persist for a long time. With that background, can pricing be a distinctive competency? Usually not. Most prices can be copied quickly. However, there are two cases that deserve more inspection. First, what about companies that create new pricing models? For example, when Netflix started renting movies using a monthly subscription model, they changed the pricing model. In some situations, like Netflix, you could argue this could be a distinctive competency. However, other pricing model changes, like the first airline to start charging for checked luggage, are not distinctive competencies. The difference is how easily the price model change can be copied in the market. Second, is low price a distinctive competency? Low price is certainly a brand statement, but the real distinctive competency of companies like Walmart is their […]
May 04, 2017 - A distinctive competency is something you are really good at and your competition isn’t. Think of this as a unique core competency that you have in the marketplace. It is possible to have more than one distinctive competency, but in my conversations with companies, it’s more common that companies haven’t found or created a distinctive competency. Distinctive competencies are rarely features. Product features are often copied quickly, but distinctive competencies persist for a long time. With that background, can pricing be a distinctive competency? Usually not. Most prices can be copied quickly. However, there are two cases that deserve more inspection. First, what about companies that create new pricing models? For example, when Netflix started renting movies using a monthly subscription model, they changed the pricing model. In some situations, like Netflix, you could argue this could be a distinctive competency. However, other pricing model changes, like the first airline to start charging for checked luggage, are not distinctive competencies. The difference is how easily the price model change can be copied in the market. Second, is low price a distinctive competency? Low price is certainly a brand statement, but the real distinctive competency of companies like Walmart is their […]
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Premature Pricing: When to Communicate Pricing Information
Apr 26, 2017 - When during the sales cycle should you talk about pricing? The correct answer is “it depends.” It depends on the type of sales cycle or buyer’s journey. It depends on the type of product you sell. It depends on the familiarity of your market with your competitors. However, if there is one guideline on this topic it is this: Communicate price after value is understood. Sometimes they happen simultaneously. Notice that almost all B2C sales situations clearly show the price of the product immediately. In many of these cases consumers already know the value. Imagine shopping for a pair of Levi’s. You already know the brand and the quality. You decide if the price is worth whatever value you think you will get. We also know that price is often a signal of quality. In many B2C situations consumers use price as one of the factors that tells them the quality. Since quality is likely one piece of value, you may interpret this as price is a signal of value. In these situations, consumers are determining value simultaneously with observing price. When selling automobiles to consumers, almost nobody pays the list price. It is a negotiated deal. In this situation, […]
Apr 26, 2017 - When during the sales cycle should you talk about pricing? The correct answer is “it depends.” It depends on the type of sales cycle or buyer’s journey. It depends on the type of product you sell. It depends on the familiarity of your market with your competitors. However, if there is one guideline on this topic it is this: Communicate price after value is understood. Sometimes they happen simultaneously. Notice that almost all B2C sales situations clearly show the price of the product immediately. In many of these cases consumers already know the value. Imagine shopping for a pair of Levi’s. You already know the brand and the quality. You decide if the price is worth whatever value you think you will get. We also know that price is often a signal of quality. In many B2C situations consumers use price as one of the factors that tells them the quality. Since quality is likely one piece of value, you may interpret this as price is a signal of value. In these situations, consumers are determining value simultaneously with observing price. When selling automobiles to consumers, almost nobody pays the list price. It is a negotiated deal. In this situation, […]
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Sales and Marketing Alignment – Why is it so hard?
Apr 21, 2017 - CEOs struggle to get their Sales and Marketing teams to work together. It seems simple enough. We all are driving toward the same outcome. Yet there is friction between the Sales and Marketing teams that is either visible or simmering below the surface. Sales has a mission that is clear and visible. They sell stuff and bring money into the company. The Sales team has a quota to hold them accountable for achieving their mission. Sales often believes the only role of Marketing is to support selling efforts. Marketing has many missions ranging from strategic market planning to supporting day-to-day sales efforts. The Marketing team has a wide range of metrics to hold them accountable for their efforts. Marketing doesn’t believe they are short-order cooks for the Sales team. When there is a disconnect between how each group approaches achieving the goals of the business you experience Sales and Marketing misalignment.  Each group understands the definition of success (the business goals). Where the tangle starts is the interpretation of how the goals get accomplished. Sales chooses to take one path to success. Marketing takes a different path. The result is misalignment. Both seek to take the moral high ground. There is great irony when both groups claim […]
Apr 21, 2017 - CEOs struggle to get their Sales and Marketing teams to work together. It seems simple enough. We all are driving toward the same outcome. Yet there is friction between the Sales and Marketing teams that is either visible or simmering below the surface. Sales has a mission that is clear and visible. They sell stuff and bring money into the company. The Sales team has a quota to hold them accountable for achieving their mission. Sales often believes the only role of Marketing is to support selling efforts. Marketing has many missions ranging from strategic market planning to supporting day-to-day sales efforts. The Marketing team has a wide range of metrics to hold them accountable for their efforts. Marketing doesn’t believe they are short-order cooks for the Sales team. When there is a disconnect between how each group approaches achieving the goals of the business you experience Sales and Marketing misalignment.  Each group understands the definition of success (the business goals). Where the tangle starts is the interpretation of how the goals get accomplished. Sales chooses to take one path to success. Marketing takes a different path. The result is misalignment. Both seek to take the moral high ground. There is great irony when both groups claim […]
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Price: A Signal of Quality
Aug 08, 2017 - Many buyers use price as a signal of quality, but what does that mean to you if you set price? First,...
Aug 08, 2017 - Many buyers use price as a signal of quality, but what does that mean to you if you set price? First,...
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Finances Role In Pricing
Feb 01, 2017 -

Feb 01, 2017 -

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Becoming a Pricing Expert
Apr 13, 2017 - A question from a reader: Just to introduce myself, I started my career in a cost consultancy startup that was involved in...
Apr 13, 2017 - A question from a reader: Just to introduce myself, I started my career in a cost consultancy startup that was involved in...
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Losing on Price
Mar 15, 2017 - Ask a salesperson why he lost a deal and the answer is often “price.” Let’s stipulate that is true. It is still only half the story. If you attach enough gold bullion to your product, the value would increase to the point where the customer would pay your price. When you lose on price, it really means that you didn’t deliver enough value for the price. Both sides matter. To avoid losing, you can do two things: lower your price or increase the value you deliver. Lowering your price is usually a horrible idea, so how can you increase value? Create more value by improving your product. You can add more capability, more features, more services. However, these additions must be valued by your market or you still won’t win at your price. Talk to your market to be certain what you are adding matters to them. Communicate your value better. You could have the best product in the world, but if your market doesn’t know it, you won’t get paid for it. Communicating value is the responsibility of both marketing and sales. Marketing communicates to a market, sales should be customizing that communication to individual buyers. If you do […]
Mar 15, 2017 - Ask a salesperson why he lost a deal and the answer is often “price.” Let’s stipulate that is true. It is still only half the story. If you attach enough gold bullion to your product, the value would increase to the point where the customer would pay your price. When you lose on price, it really means that you didn’t deliver enough value for the price. Both sides matter. To avoid losing, you can do two things: lower your price or increase the value you deliver. Lowering your price is usually a horrible idea, so how can you increase value? Create more value by improving your product. You can add more capability, more features, more services. However, these additions must be valued by your market or you still won’t win at your price. Talk to your market to be certain what you are adding matters to them. Communicate your value better. You could have the best product in the world, but if your market doesn’t know it, you won’t get paid for it. Communicating value is the responsibility of both marketing and sales. Marketing communicates to a market, sales should be customizing that communication to individual buyers. If you do […]
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When You Should Use Cost-Plus Pricing
Mar 08, 2017 -

So many companies use cost-plus pricing. I’d venture to say that almost all hardware companies and services companies with hard direct costs use some form of cost-plus pricing. Yet, pricing people know this is wrong. It leaves money on the table. In the majority of situations, cost-plus pricing makes no sense.

Mar 08, 2017 -

So many companies use cost-plus pricing. I’d venture to say that almost all hardware companies and services companies with hard direct costs use some form of cost-plus pricing. Yet, pricing people know this is wrong. It leaves money on the table. In the majority of situations, cost-plus pricing makes no sense.

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A Question About Pricing Models
Feb 15, 2017 - “Mark, I was in your pricing class yesterday (I was the obnoxious one wearing a baseball cap) and it was very informative, I learned a lot. “I know you’re very busy, and I apologize for the imposition, but one thing we didn’t go over were different pricing models. For example, in our business we have varied pricing models for our SaaS products. Some are a variable monthly fee based on hospital size (bed count), some are “pay by script” (for retail pharmacies), or a “winners only” pay model (meaning only pay for a script when it is profitable, regardless of total script count). Another common model I’ve seen in the healthcare industry is, “We keep 25 percent of any reimbursement we are able to capture that was missed at the time of claims submission. “One of our biggest challenges before going to market (or sometimes after) is determining the appropriate model to use (even after deciding to go SaaS over traditional software) and I did a cursory search of your blog for strategies on this and I was unable to find any. Thanks, E.” Hi E, Thanks for the kind words and of course I remember you. You may recall […]
Feb 15, 2017 - “Mark, I was in your pricing class yesterday (I was the obnoxious one wearing a baseball cap) and it was very informative, I learned a lot. “I know you’re very busy, and I apologize for the imposition, but one thing we didn’t go over were different pricing models. For example, in our business we have varied pricing models for our SaaS products. Some are a variable monthly fee based on hospital size (bed count), some are “pay by script” (for retail pharmacies), or a “winners only” pay model (meaning only pay for a script when it is profitable, regardless of total script count). Another common model I’ve seen in the healthcare industry is, “We keep 25 percent of any reimbursement we are able to capture that was missed at the time of claims submission. “One of our biggest challenges before going to market (or sometimes after) is determining the appropriate model to use (even after deciding to go SaaS over traditional software) and I did a cursory search of your blog for strategies on this and I was unable to find any. Thanks, E.” Hi E, Thanks for the kind words and of course I remember you. You may recall […]
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Good, Better, Best at McDonald’s
Feb 08, 2017 - Sure McD’s has always had small, medium, and large fries, and small, medium and large drinks. These are classic good, better, best pricing and portfolio techniques. However, they recently went to good, better, best for the most classic of all McDonald’s sandwiches: the Big Mac. They are introducing the Mac Jr, a Big Mac with only one beef patty. (In case you didn’t know, a Big Mac is two all-beef patties, special sauce, lettuce, cheese, pickles and onions on a sesame seed bun.) They are also introducing the Grand Mac which has two bigger patties of meat. Like most companies, McDonald’s hasn’t shared their reasoning behind this, but let’s see if we can make sense of it. First, the Big Mac is the iconic McD burger. The special sauce really is unique. (Full disclosure: I worked at McDonald’s as a burger flipper almost 40 years ago. It’s probably why I use so many McD examples.) People used to order a cheeseburger and ask for Mac sauce on it. Other fast-food places don’t offer that sauce, which is good for McD’s. Why would McDonald’s go from offering just a single version of a Big Mac to having a good, better, best (or small, […]
Feb 08, 2017 - Sure McD’s has always had small, medium, and large fries, and small, medium and large drinks. These are classic good, better, best pricing and portfolio techniques. However, they recently went to good, better, best for the most classic of all McDonald’s sandwiches: the Big Mac. They are introducing the Mac Jr, a Big Mac with only one beef patty. (In case you didn’t know, a Big Mac is two all-beef patties, special sauce, lettuce, cheese, pickles and onions on a sesame seed bun.) They are also introducing the Grand Mac which has two bigger patties of meat. Like most companies, McDonald’s hasn’t shared their reasoning behind this, but let’s see if we can make sense of it. First, the Big Mac is the iconic McD burger. The special sauce really is unique. (Full disclosure: I worked at McDonald’s as a burger flipper almost 40 years ago. It’s probably why I use so many McD examples.) People used to order a cheeseburger and ask for Mac sauce on it. Other fast-food places don’t offer that sauce, which is good for McD’s. Why would McDonald’s go from offering just a single version of a Big Mac to having a good, better, best (or small, […]
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Finance’s Role in Pricing
Feb 01, 2017 - Finance should NOT set prices. Finance cares a lot about pricing because they focus on profitability. They need to project how profitable the company will be and price is a major component for them. Absolutely, they care about pricing. But finance should NOT set prices. Here’s the problem: Finance people do not know the value of their products. If they set prices, the only strategy they can use is use cost plus. Anybody who knows anything about pricing knows this is the wrong answer if the goal is to maximize profit. However, finance people can play an important role in pricing. Here are several ways. Margin guidance: Finance knows what investors or owners expect in terms of overall margin. They can provide this guidance to the pricing people who then can assure that their blended margin, across all of their products, achieves that margin goal. Margin floor: Some companies set a margin floor, meaning they won’t accept any business at a margin below that floor. I’m not a huge fan of margin floors because sometimes companies are willing to take a piece of business at a loss in order to capture other business at a profit. However, one of the […]
Feb 01, 2017 - Finance should NOT set prices. Finance cares a lot about pricing because they focus on profitability. They need to project how profitable the company will be and price is a major component for them. Absolutely, they care about pricing. But finance should NOT set prices. Here’s the problem: Finance people do not know the value of their products. If they set prices, the only strategy they can use is use cost plus. Anybody who knows anything about pricing knows this is the wrong answer if the goal is to maximize profit. However, finance people can play an important role in pricing. Here are several ways. Margin guidance: Finance knows what investors or owners expect in terms of overall margin. They can provide this guidance to the pricing people who then can assure that their blended margin, across all of their products, achieves that margin goal. Margin floor: Some companies set a margin floor, meaning they won’t accept any business at a margin below that floor. I’m not a huge fan of margin floors because sometimes companies are willing to take a piece of business at a loss in order to capture other business at a profit. However, one of the […]
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Tesla Prices Hardware Like It Is Software
Jan 25, 2017 - The biggest difference between hardware and software products is the incremental cost to producing the next unit. Software has practically zero incremental costs.  Hardware on the other hand has a hard cost to building the next one.  There are parts and manufacturing and logistics and … One pricing technique that software companies have used for a long time is to build a fully functional product, then create sub products by using software switches to turn off some features.  This enables them to sell a lower priced lower featured product to win business from their price sensitive customers.  Then they offer upgrades to those same customers.  When a customer buys an upgrade, they can easily flip the software switch to turn on that capability. Most hardware companies don’t do this.  Instead, hardware companies tend to build a different version of the product for each price point.  Think of the Apple iPhone 7.  They created three different versions: 32 GB, 128 GB, 256 GB.  Each version is physically different based on the amount of memory installed. Tesla is breaking that mold.  When you buy a Model S, it is configured the same as every other Model S (with the exception of the amount […]
Jan 25, 2017 - The biggest difference between hardware and software products is the incremental cost to producing the next unit. Software has practically zero incremental costs.  Hardware on the other hand has a hard cost to building the next one.  There are parts and manufacturing and logistics and … One pricing technique that software companies have used for a long time is to build a fully functional product, then create sub products by using software switches to turn off some features.  This enables them to sell a lower priced lower featured product to win business from their price sensitive customers.  Then they offer upgrades to those same customers.  When a customer buys an upgrade, they can easily flip the software switch to turn on that capability. Most hardware companies don’t do this.  Instead, hardware companies tend to build a different version of the product for each price point.  Think of the Apple iPhone 7.  They created three different versions: 32 GB, 128 GB, 256 GB.  Each version is physically different based on the amount of memory installed. Tesla is breaking that mold.  When you buy a Model S, it is configured the same as every other Model S (with the exception of the amount […]
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Tesla Prices Hardware Like It Is Software
Jan 25, 2017 - The biggest difference between hardware and software products is the incremental cost to producing the next unit. Software has practically zero...
Jan 25, 2017 - The biggest difference between hardware and software products is the incremental cost to producing the next unit. Software has practically zero...
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When to Price
Jan 16, 2017 - Most companies only set prices after they have developed a product. That is certainly a critical time and it is the most obvious. They have to finalize the price at that moment. However, pricing should be done at many steps during the product development process and throughout the life of the product. Before a company builds a product, hopefully they have a business plan. That business plan should include revenue forecasts. Revenue comes from units sold times price per unit. You have to know price to get to revenue. So, the product should have a price on it during the business plan stage. Going back even earlier, pricing is also important in deciding which opportunities deserve the investment of a business plan. If we build something, will anybody pay for it? A reasonable number? The number doesn’t have to be precise, but a price estimate is important. Another key role of pricing during the product development process is in defining the product portfolio strategy. This requires a clear understanding of the market segment(s) you are going after. What different versions should you build based on these market segments and their willingness to pay? Should you build a platform and sell […]
Jan 16, 2017 - Most companies only set prices after they have developed a product. That is certainly a critical time and it is the most obvious. They have to finalize the price at that moment. However, pricing should be done at many steps during the product development process and throughout the life of the product. Before a company builds a product, hopefully they have a business plan. That business plan should include revenue forecasts. Revenue comes from units sold times price per unit. You have to know price to get to revenue. So, the product should have a price on it during the business plan stage. Going back even earlier, pricing is also important in deciding which opportunities deserve the investment of a business plan. If we build something, will anybody pay for it? A reasonable number? The number doesn’t have to be precise, but a price estimate is important. Another key role of pricing during the product development process is in defining the product portfolio strategy. This requires a clear understanding of the market segment(s) you are going after. What different versions should you build based on these market segments and their willingness to pay? Should you build a platform and sell […]
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Fake Sales at Top Retailers: The Power of Discounts
Jan 03, 2017 - Los Angeles City Attorney Mike Feuer filed a lawsuit against Macy’s, Kohls, JC Penney and Sears for deceptive advertising. These firms allegedly advertised a high original price with a low sale price without ever having sold the product at the advertised original price. The law in California states that these firms must have sold the product at the original price within the previous three months. We will let Mike Feuer deal with the legality. Let’s talk about the power of discounts. Assume a product sells for $10. You want this product and are willing to pay the price. However, how much better would you feel if you knew the product normally sells for $20 and you could buy it at $10? If you think about it, the normal price should be irrelevant to your decision. But it’s not. It feels so good to get a discount. This is one implementation of a concept called reference price. A reference price is simply the price the shopper believes the product should sell for. Reference prices are formed many ways. One way is when a shopper has shopped for a period of time, knows the price of a product and then sees it go on sale. This […]
Jan 03, 2017 - Los Angeles City Attorney Mike Feuer filed a lawsuit against Macy’s, Kohls, JC Penney and Sears for deceptive advertising. These firms allegedly advertised a high original price with a low sale price without ever having sold the product at the advertised original price. The law in California states that these firms must have sold the product at the original price within the previous three months. We will let Mike Feuer deal with the legality. Let’s talk about the power of discounts. Assume a product sells for $10. You want this product and are willing to pay the price. However, how much better would you feel if you knew the product normally sells for $20 and you could buy it at $10? If you think about it, the normal price should be irrelevant to your decision. But it’s not. It feels so good to get a discount. This is one implementation of a concept called reference price. A reference price is simply the price the shopper believes the product should sell for. Reference prices are formed many ways. One way is when a shopper has shopped for a period of time, knows the price of a product and then sees it go on sale. This […]
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Why Companies Don’t Focus on Pricing
Dec 19, 2016 - Pricing is the most powerful of all of the marketing mix levers. Depending on gross margin, a 1 percent improvement in pricing can lead to a 10 percent increase in profitability. Yet, many companies don’t have a company-wide effort for price management. Sure, all companies have someone or some department who does pricing but very few truly understand and focus on pricing. Why? Let’s look at several explanations. It’s not their business. Companies spend 99 percent of their time and energy trying to create value in the marketplace. They do this by designing and building high-quality, innovative products. They market and sell these products. They support their customers. Almost everything a company does either creates or destroys value and companies wisely focus on how to create more value. Pricing isn’t creating value, so it’s just not a focus. They don’t realize the importance of price. This goes along with the previous reason. Invoicing doesn’t create value (but it can destroy it) yet companies realize that invoicing is important, otherwise they wouldn’t get paid and would go out of business. Pricing feels like tweaking invoicing. Invoicing is all or nothing. Pricing happens at the margin. Of course we know pricing is […]
Dec 19, 2016 - Pricing is the most powerful of all of the marketing mix levers. Depending on gross margin, a 1 percent improvement in pricing can lead to a 10 percent increase in profitability. Yet, many companies don’t have a company-wide effort for price management. Sure, all companies have someone or some department who does pricing but very few truly understand and focus on pricing. Why? Let’s look at several explanations. It’s not their business. Companies spend 99 percent of their time and energy trying to create value in the marketplace. They do this by designing and building high-quality, innovative products. They market and sell these products. They support their customers. Almost everything a company does either creates or destroys value and companies wisely focus on how to create more value. Pricing isn’t creating value, so it’s just not a focus. They don’t realize the importance of price. This goes along with the previous reason. Invoicing doesn’t create value (but it can destroy it) yet companies realize that invoicing is important, otherwise they wouldn’t get paid and would go out of business. Pricing feels like tweaking invoicing. Invoicing is all or nothing. Pricing happens at the margin. Of course we know pricing is […]
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Pricing or Purchasing - Which Is More Important?
Mar 31, 2015 - A colleague recently pointed out that several people he knows in pricing have moved into purchasing. This simultaneously makes sense and...
Mar 31, 2015 - A colleague recently pointed out that several people he knows in pricing have moved into purchasing. This simultaneously makes sense and...
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Pricing the Apple Watches
Mar 16, 2015 - Several people have asked my opinion of the pricing of the new Apple Watch, in particular the $17,000 dollar watch. Please...
Mar 16, 2015 - Several people have asked my opinion of the pricing of the new Apple Watch, in particular the $17,000 dollar watch. Please...
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All Roadmaps Lead to Pricing
Mar 16, 2015 - This month’s activity of the month is Roadmaps.  You might be wondering how that relates to pricing.  It really depends on...
Mar 16, 2015 - This month’s activity of the month is Roadmaps.  You might be wondering how that relates to pricing.  It really depends on...
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Price Segmentation: Justify it or Hide it
May 19, 2013 - Nobody wants to pay more.  They don't want to feel "ripped off".  They want to feel special, like they received a...
May 19, 2013 - Nobody wants to pay more.  They don't want to feel "ripped off".  They want to feel special, like they received a...
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The Power of Loss Aversion in Pricing
May 12, 2013 - After reading a short article by Cass Sunstein on The Power of Loss Aversion, the urge to translate this to pricing...
May 12, 2013 - After reading a short article by Cass Sunstein on The Power of Loss Aversion, the urge to translate this to pricing...
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Cost-Plus Conundrum
May 05, 2013 - When you lower your cost of goods sold (COGS), do you make more profit? Not necessarily if you use cost plus pricing. Imagine...
May 05, 2013 - When you lower your cost of goods sold (COGS), do you make more profit? Not necessarily if you use cost plus pricing. Imagine...
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Should Your Pricing be Fixed or Flexible?
Apr 27, 2013 - The answer: flexible ... unless there is a good reason to not.  A good reasons could be very low transaction values,...
Apr 27, 2013 - The answer: flexible ... unless there is a good reason to not.  A good reasons could be very low transaction values,...
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Air Travel Pricing by the Pound - Some Lessons
Apr 13, 2013 - Samoa Air recently announced that they will begin charging for airline tickets by the pound.  When you first heard about this, you...
Apr 13, 2013 - Samoa Air recently announced that they will begin charging for airline tickets by the pound.  When you first heard about this, you...
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Shoppers are NOT Strategic - Accept It and Create Value
Apr 07, 2013 - "People need to buy from us because if they don't the local stores will go out of business.  Then there won't...
Apr 07, 2013 - "People need to buy from us because if they don't the local stores will go out of business.  Then there won't...
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How to Compete against Free
Mar 23, 2013 - Software entrepreneurs frequently ask me, "I have a competitor who gives this away.  How much can I charge?" The answer:  "Nothing". If you...
Mar 23, 2013 - Software entrepreneurs frequently ask me, "I have a competitor who gives this away.  How much can I charge?" The answer:  "Nothing". If you...
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The Hooker Story
Mar 18, 2013 - This week, please enjoy this fun story about my experience with a Las Vegas Hooker.  (Pricing experience.) I tell this story at the...
Mar 18, 2013 - This week, please enjoy this fun story about my experience with a Las Vegas Hooker.  (Pricing experience.) I tell this story at the...
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Why You Must Offer Good, Better, Best
Mar 10, 2013 - Almost everyone should implement a good, better, best strategy.  Pragmatic Pricing has said this many times.  Here is another piece of...
Mar 10, 2013 - Almost everyone should implement a good, better, best strategy.  Pragmatic Pricing has said this many times.  Here is another piece of...
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Free Money from Price Execution
Mar 02, 2013 - Pragmatic Pricing almost always focuses on value.  How can you create more value?  How can you determine how much your customers...
Mar 02, 2013 - Pragmatic Pricing almost always focuses on value.  How can you create more value?  How can you determine how much your customers...
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You Need A Reason To Raise Prices
Feb 25, 2013 - Face it, people hate price increases.  You probably hate them when you are the buyer.  Purchasing agents at large corporations get...
Feb 25, 2013 - Face it, people hate price increases.  You probably hate them when you are the buyer.  Purchasing agents at large corporations get...
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Pricing for the Long Term
Feb 17, 2013 - In January the HBR Blog Network had an interview with Jeff Bezos on Leading for the Long-Term at Amazon.  During this interview...
Feb 17, 2013 - In January the HBR Blog Network had an interview with Jeff Bezos on Leading for the Long-Term at Amazon.  During this interview...
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Pricing is ... Risky
Feb 09, 2013 - If you're a regular reader you know that pricing is by far the most powerful of the marketing mix variables.  For...
Feb 09, 2013 - If you're a regular reader you know that pricing is by far the most powerful of the marketing mix variables.  For...
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The Price of Popcorn at Movie Theaters or How To Gouge Your Customers
Feb 02, 2013 - Why Is Popcorn Expensive at Movie Theaters? You intuitively know the answer.  You recognize that popcorn is so expensive because once someone...
Feb 02, 2013 - Why Is Popcorn Expensive at Movie Theaters? You intuitively know the answer.  You recognize that popcorn is so expensive because once someone...
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New Business Models - The Most Exciting Role for Pricing
Jan 26, 2013 - Pricing is fun!  We help companies create value, determine how much value they create, and then capture that value.  But there...
Jan 26, 2013 - Pricing is fun!  We help companies create value, determine how much value they create, and then capture that value.  But there...
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How to Add Value - Learn from a Professional Equestrian
Jan 13, 2013 - The other day I met someone with a career I hadn't heard of before, a professional equestrian. Caitlin Lighthouse does some things...
Jan 13, 2013 - The other day I met someone with a career I hadn't heard of before, a professional equestrian. Caitlin Lighthouse does some things...
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Hey Uber - Great Job Managing Price Expectations
Jan 05, 2013 - A year ago New Year's Eve (2011), Uber had a PR problem.  They were accused of gouging their customers.  For example,...
Jan 05, 2013 - A year ago New Year's Eve (2011), Uber had a PR problem.  They were accused of gouging their customers.  For example,...
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Segmentation - Pricing vs. Marketing
Dec 30, 2012 - Question:  What are the differences between market segmentation and price segmentation? Answer: The goals and the techniques. The goals - In market segmentation,...
Dec 30, 2012 - Question:  What are the differences between market segmentation and price segmentation? Answer: The goals and the techniques. The goals - In market segmentation,...
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Sleazy Pricing by WSJ
Dec 23, 2012 - Companies should be paid handsomely for the value they create.  They should NOT use deceitful pricing tactics in the process.  Earlier...
Dec 23, 2012 - Companies should be paid handsomely for the value they create.  They should NOT use deceitful pricing tactics in the process.  Earlier...
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Pricing Teeter Totter
Dec 17, 2012 - Have you heard this from sales?  "Our prices are too high and we can't win business.  Customers won't pay that much." How...
Dec 17, 2012 - Have you heard this from sales?  "Our prices are too high and we can't win business.  Customers won't pay that much." How...
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Pricing is ... Dependent
Dec 09, 2012 - Of course it is.  The question is "dependent on what?"  The answer is the 5 C's.  Costs, Customers, Competitors, Corporate Strategy,...
Dec 09, 2012 - Of course it is.  The question is "dependent on what?"  The answer is the 5 C's.  Costs, Customers, Competitors, Corporate Strategy,...
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How Your Customers Use Price
Dec 08, 2012 - One of the earliest Pragmatic Pricing blogs was about "Will I? and Which one?" (If you're not familiar with this very...
Dec 08, 2012 - One of the earliest Pragmatic Pricing blogs was about "Will I? and Which one?" (If you're not familiar with this very...
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Marketshare and Pricing - Ouch
Nov 26, 2012 - Marketshare is a laudable goal for a company.  Just don't use pricing to achieve it.  Trina Solar's announcement is one demonstration. ...
Nov 26, 2012 - Marketshare is a laudable goal for a company.  Just don't use pricing to achieve it.  Trina Solar's announcement is one demonstration. ...
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What Pricing People (should) Do
Nov 18, 2012 - When you think of someone in pricing, you probably imagine someone putting a price on a product or service. Although this...
Nov 18, 2012 - When you think of someone in pricing, you probably imagine someone putting a price on a product or service. Although this...
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Pricing is ... Ubiquitous (?)
Nov 12, 2012 - Everything has a price. Supposedly, Winston Churchill had the following conversation. Churchill: "Madam, would you sleep with me for five million pounds?" Socialite: "My...
Nov 12, 2012 - Everything has a price. Supposedly, Winston Churchill had the following conversation. Churchill: "Madam, would you sleep with me for five million pounds?" Socialite: "My...
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Pricing Ethics?
Nov 05, 2012 - San Francisco State University asked me to speak about pricing ethics. My first thought was, what's ethical about pricing? After a...
Nov 05, 2012 - San Francisco State University asked me to speak about pricing ethics. My first thought was, what's ethical about pricing? After a...
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Pricing Rules and Bad Behavior
Oct 31, 2012 - Salespeople want to close business. It is their job to jump every hurdle put in their way. As pricing people, when we...
Oct 31, 2012 - Salespeople want to close business. It is their job to jump every hurdle put in their way. As pricing people, when we...
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Pricing is ... Specific
Dec 03, 2012 - (12/8/12  I just noticed I posted this blog a second time.  It was first posted in October.  I owe you one. ...
Dec 03, 2012 - (12/8/12  I just noticed I posted this blog a second time.  It was first posted in October.  I owe you one. ...
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Teslas, Warranties and Whiners - More Pricing Lessons
Oct 14, 2012 - A friend asked for my opinion on this blog - Tesla Model S Service Contract: $600/Year, Or Warranty Voided by David...
Oct 14, 2012 - A friend asked for my opinion on this blog - Tesla Model S Service Contract: $600/Year, Or Warranty Voided by David...
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The Rise and Fall of Gas Prices - Why so Fast and Slow?
Oct 09, 2012 - This morning while watching CNBC they were talking about how oil prices are down but we aren't seeing relief at the...
Oct 09, 2012 - This morning while watching CNBC they were talking about how oil prices are down but we aren't seeing relief at the...
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Tweaking Prices
Sep 29, 2012 - Consider pricing as two steps, setting the price level and tweaking. The price level is based on Value Based Pricing.  This...
Sep 29, 2012 - Consider pricing as two steps, setting the price level and tweaking. The price level is based on Value Based Pricing.  This...
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Make them Ask
Sep 23, 2012 - Last week, I received an email from McCormick and Schmick's Seafood restaurant offering a good price on a 3 course tasting...
Sep 23, 2012 - Last week, I received an email from McCormick and Schmick's Seafood restaurant offering a good price on a 3 course tasting...
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Hey Women - Quit Whining about Pricing
Sep 16, 2012 - A very good female friend wrote to me, "Well Dr. Stiving.... Read this article. I am angry! Blog about this one!" ...
Sep 16, 2012 - A very good female friend wrote to me, "Well Dr. Stiving.... Read this article. I am angry! Blog about this one!" ...
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Pricing is ... Unintuitive
Sep 11, 2012 - The other night a colleague from Ireland told me this story about his father.  Jack managed a small grocery store in...
Sep 11, 2012 - The other night a colleague from Ireland told me this story about his father.  Jack managed a small grocery store in...
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Should You Raise or Lower Prices?
Sep 02, 2012 - You are thinking about lowering your price 10% to capture more customers.  Should you?   Ask yourself:  "Will you make more or less...
Sep 02, 2012 - You are thinking about lowering your price 10% to capture more customers.  Should you?   Ask yourself:  "Will you make more or less...
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SF StartUP ProductTalks Presentation Summary
Aug 28, 2012 - Last week I had the pleasure of talking about pricing to 150+ product managers.  It was a great audience with keen...
Aug 28, 2012 - Last week I had the pleasure of talking about pricing to 150+ product managers.  It was a great audience with keen...
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Freemium Is Getting a Bad Rap
Aug 25, 2012 - Last week, while speaking to 150+ mostly software focused product managers at the Startup Product Talks Meetup in San Francisco, I...
Aug 25, 2012 - Last week, while speaking to 150+ mostly software focused product managers at the Startup Product Talks Meetup in San Francisco, I...
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Pricing's Second Most Important Concept
Aug 19, 2012 - There are a lot of articles and several books now that talk about the psychological aspects of pricing.  These are fun...
Aug 19, 2012 - There are a lot of articles and several books now that talk about the psychological aspects of pricing.  These are fun...
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What You Get Paid For
Aug 15, 2012 - If you are a believer in Value Based Pricing, you know we get paid based on how much value we offer...
Aug 15, 2012 - If you are a believer in Value Based Pricing, you know we get paid based on how much value we offer...
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Pricing is ... Externally Focused
Aug 05, 2012 - At first glance, this seems obvious.  Charge what customers are willing to pay.  Customers are external, so pricing is ... external. So...
Aug 05, 2012 - At first glance, this seems obvious.  Charge what customers are willing to pay.  Customers are external, so pricing is ... external. So...
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JCPenney's Problem - Their "Price Brand"
Jul 28, 2012 - By now you surely know that JCPenney changed their pricing strategy.  In February they went from having 560 annual sales events...
Jul 28, 2012 - By now you surely know that JCPenney changed their pricing strategy.  In February they went from having 560 annual sales events...
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Price Early and Often
Jul 16, 2012 - There is a saying in Chicago on election day, "Vote early and often."  Of course voting more than once is illegal. ...
Jul 16, 2012 - There is a saying in Chicago on election day, "Vote early and often."  Of course voting more than once is illegal. ...
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Pricing is ... Information
Jul 08, 2012 - A price is the amount of money someone has to give up to acquire a product or service.  Duh.  Everyone knows...
Jul 08, 2012 - A price is the amount of money someone has to give up to acquire a product or service.  Duh.  Everyone knows...
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A Margin Floor is Not Cost-plus
Jul 01, 2012 - Great news!  Most pricers have internalized the mantra "Don't use cost plus pricing."  Unfortunately many don't really understand the concept. Here's one...
Jul 01, 2012 - Great news!  Most pricers have internalized the mantra "Don't use cost plus pricing."  Unfortunately many don't really understand the concept. Here's one...
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The Bigger Game of Pricing
Jun 24, 2012 - Most of the time we think about pricing a single product (or service).  When we do it well, we think of...
Jun 24, 2012 - Most of the time we think about pricing a single product (or service).  When we do it well, we think of...
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Pricing is ... a Zero Sum Game
Jun 17, 2012 - How is this possible?  In the last blog we wrote that pricing is win-win.  Aren't win-win and zero sum games contradictory?...
Jun 17, 2012 - How is this possible?  In the last blog we wrote that pricing is win-win.  Aren't win-win and zero sum games contradictory?...
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Pricing is ... Win-Win
Jun 11, 2012 - Pricing is usually seen as that step in business where companies try to trick consumers out of their money.  Although in...
Jun 11, 2012 - Pricing is usually seen as that step in business where companies try to trick consumers out of their money.  Although in...
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The ID Ten T Error - Another Reason To Not Compete on Price
Jun 05, 2012 - Have you ever noticed that the cheapest customers require the most support?  I read a blog titled "Why Cheap Customers Cost...
Jun 05, 2012 - Have you ever noticed that the cheapest customers require the most support?  I read a blog titled "Why Cheap Customers Cost...
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Is Groupon Worth It? - Do the math.
May 26, 2012 - A colleague recently asked what I thought of Groupon for the independent restaurant business. My gut says it's probably not a good...
May 26, 2012 - A colleague recently asked what I thought of Groupon for the independent restaurant business. My gut says it's probably not a good...
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Overcome Pricing Disadvantages to Small Business
May 21, 2012 - Last week we saw two ways that give small businesses advantages over large companies: setting and executing new pricing strategies.  This...
May 21, 2012 - Last week we saw two ways that give small businesses advantages over large companies: setting and executing new pricing strategies.  This...
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Hey Small Businesses - Use Pricing to Your Advantage
May 13, 2012 - Like most marketing mix variables, pricing is different in small and large companies.  Some of these differences give small companies a...
May 13, 2012 - Like most marketing mix variables, pricing is different in small and large companies.  Some of these differences give small companies a...
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Brilliant Price Segmentation - An Example
May 04, 2012 - Think about your customers.  What is different about the ones who are willing to pay more vs the ones who need...
May 04, 2012 - Think about your customers.  What is different about the ones who are willing to pay more vs the ones who need...
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How to Use Costs - An Example
Apr 30, 2012 - Here's an interesting article titled "Pricing in Reverse" on how to "price" a product based on costs. The article looked at...
Apr 30, 2012 - Here's an interesting article titled "Pricing in Reverse" on how to "price" a product based on costs. The article looked at...
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Excessive Segmentation? - Bausch & Lomb
Apr 22, 2012 - The other day I was talking with someone about price segmentation and he asked me about the Bausch & Lomb situation. ...
Apr 22, 2012 - The other day I was talking with someone about price segmentation and he asked me about the Bausch & Lomb situation. ...
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Google v Apple - A Lesson in Value
Apr 15, 2012 - Pricing captures value. Although true, it doesn't tell the whole story.  Realized profit is a great indicator of how much value...
Apr 15, 2012 - Pricing captures value. Although true, it doesn't tell the whole story.  Realized profit is a great indicator of how much value...
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Margin Math - Don't Be Tricked
Apr 08, 2012 - The difference between 90% gross margin and 50% gross margin is not what you think.  Be careful. Let's assume your company...
Apr 08, 2012 - The difference between 90% gross margin and 50% gross margin is not what you think.  Be careful. Let's assume your company...
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Pricing is ... Powerful
Apr 01, 2012 - Pricing is the most powerful marketing mix variable. A small improvement in pricing will have a huge impact in profitability. It...
Apr 01, 2012 - Pricing is the most powerful marketing mix variable. A small improvement in pricing will have a huge impact in profitability. It...
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Markup or Margin - Why Does It Matter?
Mar 24, 2012 - Markup vs. margin:  what's the difference?  For you math whizzes, it's all in the denominator.  For everyone else, it's all in...
Mar 24, 2012 - Markup vs. margin:  what's the difference?  For you math whizzes, it's all in the denominator.  For everyone else, it's all in...
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You Are Training Your Customers - Do It Wisely
Mar 15, 2012 - I ordered the New iPad on the day it was released.  I never do this, but after watching Apple's pricing over...
Mar 15, 2012 - I ordered the New iPad on the day it was released.  I never do this, but after watching Apple's pricing over...
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Pricing is ... a Signal of Quality
Mar 11, 2012 - It's no secret, pricing can signal quality. But why, and more importantly when, does it work?  Think about the last time...
Mar 11, 2012 - It's no secret, pricing can signal quality. But why, and more importantly when, does it work?  Think about the last time...
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Hotter Weather = Cheaper Beer?
Mar 04, 2012 - Remember Coke's attempt to charge higher prices on hotter days?  It failed miserably.  Now Budweiser is taking a shot at pricing...
Mar 04, 2012 - Remember Coke's attempt to charge higher prices on hotter days?  It failed miserably.  Now Budweiser is taking a shot at pricing...
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The 3 Rules for Applying Costs to Pricing
Feb 26, 2012 - A couple weeks ago I taught a pricing class to about 40 professional marketing people.  We started out discussing Value Based...
Feb 26, 2012 - A couple weeks ago I taught a pricing class to about 40 professional marketing people.  We started out discussing Value Based...
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Pricing is ... Marxist
Feb 22, 2012 - Does price segmentation make you uncomfortable?  Do you feel like you're cheating the customers who pay higher prices?  Here's one way...
Feb 22, 2012 - Does price segmentation make you uncomfortable?  Do you feel like you're cheating the customers who pay higher prices?  Here's one way...
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The Fifth C - Capacity
Feb 13, 2012 - You know the traditional 3 C's of pricing: Cost, Customer, Competitor.  We can think of these as the environmental factors that...
Feb 13, 2012 - You know the traditional 3 C's of pricing: Cost, Customer, Competitor.  We can think of these as the environmental factors that...
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Pricing is ... Psychological
Feb 05, 2012 - If people were rational, well, economic theory would work.  Buyers would make purchase decisions based solely on the value of the...
Feb 05, 2012 - If people were rational, well, economic theory would work.  Buyers would make purchase decisions based solely on the value of the...
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JC Penney's New Pricing Strategies Will Work - Here's Why
Jan 28, 2012 - Wow!  Where to begin?  The details and some data can be found in this AP article.  JC Penney is shifting from...
Jan 28, 2012 - Wow!  Where to begin?  The details and some data can be found in this AP article.  JC Penney is shifting from...
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Too much choice
Jan 22, 2012 - My nephew, third year at The Ohio State University, is taking a psychology class.  He wrote to me: "The professor suggested that...
Jan 22, 2012 - My nephew, third year at The Ohio State University, is taking a psychology class.  He wrote to me: "The professor suggested that...
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The Dollar Store and Subway
Jan 17, 2012 - "In April 2010, Colin Sharp changed the names of his chain of pound shops in Wales from Famous £1 Shop to...
Jan 17, 2012 - "In April 2010, Colin Sharp changed the names of his chain of pound shops in Wales from Famous £1 Shop to...
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Will Sales Tax Hurt Internet Sales?
Jan 16, 2012 - Very soon, Internet retail companies will no longer be exempt from collecting state sales tax. Upstream Commerce did a nice job...
Jan 16, 2012 - Very soon, Internet retail companies will no longer be exempt from collecting state sales tax. Upstream Commerce did a nice job...
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Announcement - Mark Stiving will be on a Twitter Chat
Jan 12, 2012 - On Monday January 16 at 5:00 Pacific time, Mark Stiving will be on his first ever Twitter chat. What's a Twitter chat? ...
Jan 12, 2012 - On Monday January 16 at 5:00 Pacific time, Mark Stiving will be on his first ever Twitter chat. What's a Twitter chat? ...
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Pricing is ... Quantitative
Jan 12, 2012 - Hey quant jocks - Pricing is for you!  One of the great things about pricing is we get to play with...
Jan 12, 2012 - Hey quant jocks - Pricing is for you!  One of the great things about pricing is we get to play with...
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I Love Uber (and I've Never Used It)
Jan 05, 2012 - January 2nd I heard about Uber for the first time.  A friend told me his daughter used it New Year's Eve...
Jan 05, 2012 - January 2nd I heard about Uber for the first time.  A friend told me his daughter used it New Year's Eve...
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Lipitor Pricing - It's Value Based
Jan 02, 2012 - Introduced in 1997, Lipitor produced $13 Billion of revenue per year at its peak.  Although there have been some alternatives available...
Jan 02, 2012 - Introduced in 1997, Lipitor produced $13 Billion of revenue per year at its peak.  Although there have been some alternatives available...
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Bad Pricing Advice
Dec 26, 2011 - Here is a blog from Al Berger, a 30-year professional photographer, giving pricing advice to new people entering the field.  To...
Dec 26, 2011 - Here is a blog from Al Berger, a 30-year professional photographer, giving pricing advice to new people entering the field.  To...
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Hooray(?) for Amazon's Price Check
Dec 18, 2011 - The Wall Street Journal posted a column by Al Lewis called Info-Age Shoplifting, railing against Amazon's new Price Check app for...
Dec 18, 2011 - The Wall Street Journal posted a column by Al Lewis called Info-Age Shoplifting, railing against Amazon's new Price Check app for...
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Pricing is ... Customizable
Dec 16, 2011 - Everyone is different.  We have different needs, wants, desires, tastes, habits etc.  Most relevant to Pricing, everyone has a different Willingness...
Dec 16, 2011 - Everyone is different.  We have different needs, wants, desires, tastes, habits etc.  Most relevant to Pricing, everyone has a different Willingness...
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Cost Plus Buying
Dec 09, 2011 - One trick that professional purchasing organizations commonly use today is to tear apart your product, calculate how much it costs to...
Dec 09, 2011 - One trick that professional purchasing organizations commonly use today is to tear apart your product, calculate how much it costs to...
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8 Year Old Pricing Brilliance (cute)
Dec 04, 2011 - http://www.youtube.com/watch?v=Jt3I6yLpfgw&feature=youtu.be Thanksgiving weekend I was sitting at breakfast with a brilliant 8 year old girl. I asked her questions like what she...
Dec 04, 2011 - http://www.youtube.com/watch?v=Jt3I6yLpfgw&feature=youtu.be Thanksgiving weekend I was sitting at breakfast with a brilliant 8 year old girl. I asked her questions like what she...
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Another Price Segmentation Technique
Dec 03, 2011 - Price segmentation usually means charging different prices to different customers with different willingnesses to pay.   However, it can also be...
Dec 03, 2011 - Price segmentation usually means charging different prices to different customers with different willingnesses to pay.   However, it can also be...
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Fees, Fees, and More Fees
Nov 25, 2011 - While renting a car over the holidays, I was blatantly reminded of the power of pricing complementary "products". My shopping experience...
Nov 25, 2011 - While renting a car over the holidays, I was blatantly reminded of the power of pricing complementary "products". My shopping experience...
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Features and/or Benefits
Nov 10, 2011 - I had a wild thought the other day about features and benefits.  Posted it on the AllBusiness site.  Your comments and...
Nov 10, 2011 - I had a wild thought the other day about features and benefits.  Posted it on the AllBusiness site.  Your comments and...
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Price Brand - A New Concept
Nov 07, 2011 - Last week's blog at AllBusiness proposed a new concept - Price Brand.  It's that customers have expectations about the types of...
Nov 07, 2011 - Last week's blog at AllBusiness proposed a new concept - Price Brand.  It's that customers have expectations about the types of...
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Pricing is ... Complex (just like shooting a free-throw)
Nov 04, 2011 - Ask a 12 year old boy:  "How hard is it to shoot a free-throw in basketball?"  Almost all will say something...
Nov 04, 2011 - Ask a 12 year old boy:  "How hard is it to shoot a free-throw in basketball?"  Almost all will say something...
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The Cost of Shopping - More Proof
Nov 01, 2011 - Last week in Las Vegas I saw this sign at the line for the Buffet at Harrah's.  Blatant evidence that you...
Nov 01, 2011 - Last week in Las Vegas I saw this sign at the line for the Buffet at Harrah's.  Blatant evidence that you...
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The Cost of Shopping: Why Your Customers Pay with Their Lives
Oct 26, 2011 - The Cost of Shopping:  Why Your Customers Pay with Their Lives
Oct 26, 2011 - The Cost of Shopping:  Why Your Customers Pay with Their Lives
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Pricing is ... Your Last Move
Oct 24, 2011 - Business is like a game.  You make a move.  Your competitor makes a move.  Your distribution channel makes a move.  Your...
Oct 24, 2011 - Business is like a game.  You make a move.  Your competitor makes a move.  Your distribution channel makes a move.  Your...
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New Pricing Blog on AllBusiness
Oct 19, 2011 - How Your Customers Use Price to Make Buying Decisions
Oct 19, 2011 - How Your Customers Use Price to Make Buying Decisions
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Every Customer Touch Point Creates or Destroys Value
Oct 16, 2011 - Everything your company does either creates or destroys value.  Value, when measured by a customer's willingness to pay, is in the...
Oct 16, 2011 - Everything your company does either creates or destroys value.  Value, when measured by a customer's willingness to pay, is in the...
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The Peril of Sameness or How to Buy a New Car
Jan 19, 2013 - Have you ever bought a brand new car from a dealership?  There are many strategies on how to make the best...
Jan 19, 2013 - Have you ever bought a brand new car from a dealership?  There are many strategies on how to make the best...
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Hey Netflix - It's All About Your Customers
Oct 13, 2011 - Another blog posted on AllBusiness. Hey Netflix - It's All About Your Customers
Oct 13, 2011 - Another blog posted on AllBusiness. Hey Netflix - It's All About Your Customers
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AB Blog - Pricing Your Products: 2 Questions - 1 Answer
Oct 09, 2011 - Here is the latest pricing blog I wrote for AllBusiness.com.  If you like it, please comment on the AllBusiness site. Pricing Your...
Oct 09, 2011 - Here is the latest pricing blog I wrote for AllBusiness.com.  If you like it, please comment on the AllBusiness site. Pricing Your...
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The Most Important Concept in Pricing
Sep 30, 2011 - AllBusiness, a subsidiary of D&B, asked me to write a weekly blog for them.  Here is the first one.  Please show...
Sep 30, 2011 - AllBusiness, a subsidiary of D&B, asked me to write a weekly blog for them.  Here is the first one.  Please show...
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Pricing is ... Important
Sep 27, 2011 - I'm almost embarrassed to state this, it's so obvious.  More interesting though, pricing is important to almost everyone in the company. ...
Sep 27, 2011 - I'm almost embarrassed to state this, it's so obvious.  More interesting though, pricing is important to almost everyone in the company. ...
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Pricing is ... Self-grading - What I learned while getting my MBA
Sep 20, 2011 - What grade would you give your product?  Your marketing?  Your price is that grade. One professor in my MBA program really stands...
Sep 20, 2011 - What grade would you give your product?  Your marketing?  Your price is that grade. One professor in my MBA program really stands...
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Why You Don't Want to Be the Low-Cost Leader
Sep 14, 2011 - A short article by Mark Stiving published at Entrepreneur.com. Why You Don't Want to Be the Low-Cost Leader
Sep 14, 2011 - A short article by Mark Stiving published at Entrepreneur.com. Why You Don't Want to Be the Low-Cost Leader
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Pricing Lessons from Shopping at Best Buy Mobile
Sep 11, 2011 - Yesterday while walking through a mall I saw a Best Buy Mobile store for the very first time. Since I enjoy...
Sep 11, 2011 - Yesterday while walking through a mall I saw a Best Buy Mobile store for the very first time. Since I enjoy...
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Pricing is ... Wrong
Sep 04, 2011 - Your pricing is wrong. Ouch. Well really, your pricing is most certainly not perfect.  No matter how good you are at pricing, there...
Sep 04, 2011 - Your pricing is wrong. Ouch. Well really, your pricing is most certainly not perfect.  No matter how good you are at pricing, there...
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The Demand Curve Myth
Oct 02, 2011 - What does your demand curve look like?  If you charge a price 10% higher, how much will you sell?  Every academic...
Oct 02, 2011 - What does your demand curve look like?  If you charge a price 10% higher, how much will you sell?  Every academic...
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Pricing is ... Emotional
Aug 28, 2011 - While shopping, have you ever been elated because you found something you wanted at a deeply discounted price? Alternatively, have you...
Aug 28, 2011 - While shopping, have you ever been elated because you found something you wanted at a deeply discounted price? Alternatively, have you...
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Impact Pricing - My Book
Sep 03, 2011 - Hello my friends. I enjoy using this space to share thoughts about pricing with you. However, this time please indulge me...
Sep 03, 2011 - Hello my friends. I enjoy using this space to share thoughts about pricing with you. However, this time please indulge me...
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The 4th C of Pricing
Aug 24, 2011 - You probably know about the 3 C's of pricing:  customers, competitors, and costs.  These 3 C's have a few things in...
Aug 24, 2011 - You probably know about the 3 C's of pricing:  customers, competitors, and costs.  These 3 C's have a few things in...
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Pricing is ... Instantaneous
Aug 11, 2011 - OK, maybe instant is an exaggeration, but pricing has a much faster impact than any other marketing mix variable.  As the...
Aug 11, 2011 - OK, maybe instant is an exaggeration, but pricing has a much faster impact than any other marketing mix variable.  As the...
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Pricing is ... Secret
Jul 24, 2011 - Pricing is secret, at least partially.  Companies do not advertise their pricing strategies for two key reasons, they don't want their...
Jul 24, 2011 - Pricing is secret, at least partially.  Companies do not advertise their pricing strategies for two key reasons, they don't want their...
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Netflix Pricing Mistake?
Jul 15, 2011 - Only time will tell if yesterday's Netflix price hike is a mistake or not, but this is certainly a great learning...
Jul 15, 2011 - Only time will tell if yesterday's Netflix price hike is a mistake or not, but this is certainly a great learning...
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Free Fantasy
Jun 26, 2011 - There is no such thing as a free lunch. Hmmm.  Chris Anderson's book Free: The Future of a Radical Price says that...
Jun 26, 2011 - There is no such thing as a free lunch. Hmmm.  Chris Anderson's book Free: The Future of a Radical Price says that...
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Here Comes Inflation - Don't Raise Prices Quickly
Jun 05, 2011 - Norm Brodsky in the Street Smarts column of Inc magazine titled How to Prepare Your Business for Inflation shared his absolute...
Jun 05, 2011 - Norm Brodsky in the Street Smarts column of Inc magazine titled How to Prepare Your Business for Inflation shared his absolute...
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Raising prices again - New products
Jun 12, 2011 - As I've said here several times now, customers hate price increases.  However, as pointed out to me several times this past...
Jun 12, 2011 - As I've said here several times now, customers hate price increases.  However, as pointed out to me several times this past...
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I Hate Price Increases - Do It Better
May 05, 2011 - Customers hate price increases. It's a visceral animosity that just comes naturally.  You want to be very careful when raising...
May 05, 2011 - Customers hate price increases. It's a visceral animosity that just comes naturally.  You want to be very careful when raising...
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Dynamic Pricing - Winners and Winners
Apr 24, 2011 - It is amazing how people are instantly skeptical of companies, especially when they change pricing strategies.  The thinking probably goes something...
Apr 24, 2011 - It is amazing how people are instantly skeptical of companies, especially when they change pricing strategies.  The thinking probably goes something...
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Chocolate Rising - Price Increase at Hershey's
Apr 11, 2011 - Hershey's publicly announced a price increase of 9.7%.  Why would they do this? Not why would they raise price, but why...
Apr 11, 2011 - Hershey's publicly announced a price increase of 9.7%.  Why would they do this? Not why would they raise price, but why...
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Simple Pricing
Mar 28, 2011 - The New York Time recently announced their new pricing strategy.   Several people have pointed out that it is way too complex...
Mar 28, 2011 - The New York Time recently announced their new pricing strategy.   Several people have pointed out that it is way too complex...
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Data point for subscription pricers (default to annual)
Mar 05, 2011 - The other day I learned of a situation where a company significantly changed their customers' behavior by changing the default on...
Mar 05, 2011 - The other day I learned of a situation where a company significantly changed their customers' behavior by changing the default on...
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The Price of Oil and Airline Tickets
Feb 25, 2011 - The article "Carriers Brace for Increases in Fuel Prices" in the Wall Street Journal prompted me to wonder how the airlines...
Feb 25, 2011 - The article "Carriers Brace for Increases in Fuel Prices" in the Wall Street Journal prompted me to wonder how the airlines...
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Seth Godin, Warren Buffet and Mark Stiving on Pricing Power
Feb 19, 2011 - The past week both Warren Buffet and Seth Godin used the term "Pricing Power". Seth Godin wrote a blog titled "About Pricing...
Feb 19, 2011 - The past week both Warren Buffet and Seth Godin used the term "Pricing Power". Seth Godin wrote a blog titled "About Pricing...
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Gross Margin Math
Feb 13, 2011 - What is the difference between 75% gross margin and 50% gross margin? That's easy, 25%.  So you might be tempted to jump...
Feb 13, 2011 - What is the difference between 75% gross margin and 50% gross margin? That's easy, 25%.  So you might be tempted to jump...
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The Effects of Price Expectations on Pricing Strategies
Feb 06, 2011 - In this posting I'm going to discuss an academic article.  I will greatly simplify it and pull out only the aspects...
Feb 06, 2011 - In this posting I'm going to discuss an academic article.  I will greatly simplify it and pull out only the aspects...
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IP-Free Health Insurance
May 15, 2011 - How was your health care in 1994?  From what I remember, it wasn't bad.  In fact, it was very good. Normally...
May 15, 2011 - How was your health care in 1994?  From what I remember, it wasn't bad.  In fact, it was very good. Normally...
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Flat rate vs. time and materials
Jan 16, 2011 - The battery in my car died the other day.  After unsuccessfully attempting to replace it myself (why are cars so hard...
Jan 16, 2011 - The battery in my car died the other day.  After unsuccessfully attempting to replace it myself (why are cars so hard...
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Pricing for Lifetime Value
Jan 06, 2011 - How do you price to maximize the lifetime value of a customer? What an interesting question.  In its simplest form,...
Jan 06, 2011 - How do you price to maximize the lifetime value of a customer? What an interesting question.  In its simplest form,...
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Unbundling at airlines
Jan 29, 2011 - The other day, in a group of about 25 "normal people" (i.e. non-pricers), one of them went on a rant about...
Jan 29, 2011 - The other day, in a group of about 25 "normal people" (i.e. non-pricers), one of them went on a rant about...
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The Role of Variable Costs
Dec 16, 2010 - What is the role of variable cost in pricing? This may be obvious from the post called "Fixed Costs are Irrelevant", but...
Dec 16, 2010 - What is the role of variable cost in pricing? This may be obvious from the post called "Fixed Costs are Irrelevant", but...
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Cost plus pricing
Oct 17, 2010 - Cost plus pricing seems to be the most commonly used pricing technique in business today.   After all, cost plus pricing is...
Oct 17, 2010 - Cost plus pricing seems to be the most commonly used pricing technique in business today.   After all, cost plus pricing is...
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Market cap pricing
Nov 26, 2010 - The first time I heard the concept - Price for Market Capitalization - was from a close friend of mine, Brent...
Nov 26, 2010 - The first time I heard the concept - Price for Market Capitalization - was from a close friend of mine, Brent...
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Recession is over(?) - Shrink your candy bar
May 31, 2011 - The recession is over.  Even if it isn't, inflation is starting to grow.  Either way, you are likely wondering how you're...
May 31, 2011 - The recession is over.  Even if it isn't, inflation is starting to grow.  Either way, you are likely wondering how you're...
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Fixed costs are irrelevant! (to pricing)
Nov 03, 2010 - It's true.  Your fixed costs are not relevant to your pricing decisions.  Your price should be determined by how much your...
Nov 03, 2010 - It's true.  Your fixed costs are not relevant to your pricing decisions.  Your price should be determined by how much your...
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Supply and Demand or Pricing?
Aug 09, 2011 - If you believe in supply and demand, then pricing doesn't matter.  The market sets the price.  Ouch!  I believe in supply...
Aug 09, 2011 - If you believe in supply and demand, then pricing doesn't matter.  The market sets the price.  Ouch!  I believe in supply...
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Volume pricing
Sep 29, 2010 - Do you give a discount to customers who buy higher volumes?  Most companies do.  Why? Stop reading for a just a moment...
Sep 29, 2010 - Do you give a discount to customers who buy higher volumes?  Most companies do.  Why? Stop reading for a just a moment...
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Pricing Utopia - Value Sorting Hat
Sep 05, 2010 - In the Harry Potter books, every new student at Hogwarts dons "The Sorting Hat".  This hat reads the essence of the...
Sep 05, 2010 - In the Harry Potter books, every new student at Hogwarts dons "The Sorting Hat".  This hat reads the essence of the...
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Hospital Pricing - Who Knew? (about prices)
Aug 28, 2010 - Peter Waldman published an article "Why Baby Costs Less Down the Road in Silicon Valley" describing how different hospitals charge significantly...
Aug 28, 2010 - Peter Waldman published an article "Why Baby Costs Less Down the Road in Silicon Valley" describing how different hospitals charge significantly...
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The Price of Loyalty
Aug 15, 2010 - Seth Godin blogged on pricing the other day, which of course requires a response. Seth's position is that for more expensive goods,...
Aug 15, 2010 - Seth Godin blogged on pricing the other day, which of course requires a response. Seth's position is that for more expensive goods,...
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Pricing is not a strategy (Unless you're Wal-Mart)
Aug 13, 2010 - Pricing is not a strategy. A strategy is the big picture of how you compete in the market.  Your strategy should be...
Aug 13, 2010 - Pricing is not a strategy. A strategy is the big picture of how you compete in the market.  Your strategy should be...
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Tuesday Tickets - Airline Pricing
Aug 05, 2010 - During May and June, I collected airline prices to see if I could figure out when the best time to purchase...
Aug 05, 2010 - During May and June, I collected airline prices to see if I could figure out when the best time to purchase...
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Let's Play Ball
Jul 05, 2010 - A recent New York Times article describes how some major league baseball teams are charging different prices for different games based...
Jul 05, 2010 - A recent New York Times article describes how some major league baseball teams are charging different prices for different games based...
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Round prices
Jun 27, 2010 - The last post discussed when you should end your prices in 99 cents.  So why would you use a round price,...
Jun 27, 2010 - The last post discussed when you should end your prices in 99 cents.  So why would you use a round price,...
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99 Cents - Should your prices end in it?
Jun 13, 2010 - I've always been very curious why most prices end in 99 cents.  In fact, I was so curious that I did...
Jun 13, 2010 - I've always been very curious why most prices end in 99 cents.  In fact, I was so curious that I did...
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Pricing Question: Why Do Firms Use Buy 10 Get One Free Cards?
Aug 19, 2011 - The other day someone asked me why firms use these cards where you buy 10 get one free.  For example, at...
Aug 19, 2011 - The other day someone asked me why firms use these cards where you buy 10 get one free.  For example, at...
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Good, Better, Best
Jul 22, 2010 - Good, better, best is a pricing tactic that every firm should consider.  It is an extension of versioning that takes advantage...
Jul 22, 2010 - Good, better, best is a pricing tactic that every firm should consider.  It is an extension of versioning that takes advantage...
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3 Rules to Keep it Fair
Mar 21, 2011 - If you set pricing strategy and want to maximize profits (or at least increase them), then you must use some sort...
Mar 21, 2011 - If you set pricing strategy and want to maximize profits (or at least increase them), then you must use some sort...
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$5 Footlongs
Jun 08, 2010 - Here is an interesting Business Week article on Stuart Frankel, the guy who create the $5 Footlong idea for Subway.  He's...
Jun 08, 2010 - Here is an interesting Business Week article on Stuart Frankel, the guy who create the $5 Footlong idea for Subway.  He's...
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Versioning revisited
May 30, 2010 - In an earlier post we stated that as a general rule, price segmentation works by charging the majority of the...
May 30, 2010 - In an earlier post we stated that as a general rule, price segmentation works by charging the majority of the...
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Versioning - Price Segmentation Using Product
May 30, 2010 - Price segmentation usually means selling the exact same product to two different people at different prices.  For example, two people sitting...
May 30, 2010 - Price segmentation usually means selling the exact same product to two different people at different prices.  For example, two people sitting...
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Genuinely Free
May 23, 2010 - Chris Anderson's book "Free:  The Future of a Radical Price" was insightful and thought provoking.  His basic premise, from a supply...
May 23, 2010 - Chris Anderson's book "Free:  The Future of a Radical Price" was insightful and thought provoking.  His basic premise, from a supply...
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Value Based Pricing (VBP)
May 04, 2010 - Please read Value Based Buying prior to reading this post. Value Based Pricing (VBP) is about setting a price to capture the...
May 04, 2010 - Please read Value Based Buying prior to reading this post. Value Based Pricing (VBP) is about setting a price to capture the...
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The 3 Definitions of Value
May 08, 2010 - Value is a a commonly used word, but has three different meanings in the world of pricing.  Whenever we hear that...
May 08, 2010 - Value is a a commonly used word, but has three different meanings in the world of pricing.  Whenever we hear that...
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Value Based BUYING
May 01, 2010 - Value Based PRICING is the most highly recommended pricing technique by consultants and academics.  The basic concept is setting a price...
May 01, 2010 - Value Based PRICING is the most highly recommended pricing technique by consultants and academics.  The basic concept is setting a price...
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Terms
Apr 23, 2010 - Price sensitivity (also see price elasticity, willingness to pay) Value Value in use.  The functional value of a product or service.  Value of...
Apr 23, 2010 - Price sensitivity (also see price elasticity, willingness to pay) Value Value in use.  The functional value of a product or service.  Value of...
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Will I? Which one?
Apr 24, 2010 - Will I?  Which one?  These are two questions your customers answer every time they deliberate about a purchase.  Will I buy...
Apr 24, 2010 - Will I?  Which one?  These are two questions your customers answer every time they deliberate about a purchase.  Will I buy...
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Thinking About Competition
Apr 27, 2010 - How much do you know about your competitors?  If you're busy running your own business, probably not much.  Do you know...
Apr 27, 2010 - How much do you know about your competitors?  If you're busy running your own business, probably not much.  Do you know...
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Price Segmentation - Coupons
May 12, 2010 - Coupons are a fun example of price segmentation.  Let's look at their usage through the lens of our price segmentation glasses. As...
May 12, 2010 - Coupons are a fun example of price segmentation.  Let's look at their usage through the lens of our price segmentation glasses. As...
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Coke's Segmentation Error
May 15, 2010 - Coca Cola brilliantly created a unique price segmentation method and then completely botched the execution. As you can read in this 2005...
May 15, 2010 - Coca Cola brilliantly created a unique price segmentation method and then completely botched the execution. As you can read in this 2005...
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Price Segmentation - Introduction (and ID for discount)
Apr 21, 2010 - Price segmentation is THE MOST POWERFUL TOOL you have at your pricing toolbox.  Every company, big or small, must be thinking...
Apr 21, 2010 - Price segmentation is THE MOST POWERFUL TOOL you have at your pricing toolbox.  Every company, big or small, must be thinking...
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Pricing Framework
Apr 18, 2010 - Pricing is not simple.  There are so many unique characteristics, so many factors to consider. One way to make pricing easier to...
Apr 18, 2010 - Pricing is not simple.  There are so many unique characteristics, so many factors to consider. One way to make pricing easier to...
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Pricing Is The Most Powerful Lever
Apr 12, 2010 - If there isn't a magic price that creates a ton of value, then why bother?  The answer is that pricing is...
Apr 12, 2010 - If there isn't a magic price that creates a ton of value, then why bother?  The answer is that pricing is...
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The Magic Price is like Santa Claus
Apr 11, 2010 - Many people I talk with have this belief, maybe it's just a hope, but a belief that if only they had...
Apr 11, 2010 - Many people I talk with have this belief, maybe it's just a hope, but a belief that if only they had...
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YOU Create Value, Price Only Captures It
Apr 08, 2010 - The value of a product or service is measured by how much your customers are willing to pay for it.  The...
Apr 08, 2010 - The value of a product or service is measured by how much your customers are willing to pay for it.  The...
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Welcome
Apr 08, 2010 - Welcome to Pragmatic Pricing.  This is the "How To" site for pricing for small businesses. First, a little about me (sorry).  I...
Apr 08, 2010 - Welcome to Pragmatic Pricing.  This is the "How To" site for pricing for small businesses. First, a little about me (sorry).  I...
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Mark Stiving
Apr 07, 2010 - Welcome!  I love Pricing. My pricing accomplishments include:  a Ph.D. in pricing (actually marketing) from U.C. Berkeley; a position teaching pricing for...
Apr 07, 2010 - Welcome!  I love Pricing. My pricing accomplishments include:  a Ph.D. in pricing (actually marketing) from U.C. Berkeley; a position teaching pricing for...
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A Pricing Question on Free
Oct 10, 2016 - This came from a reader: “Hey Mark, Hope all is well, the pricing knowledge from the course has certainly helped in many of our team discussions in ‘doing the right thing’ when it comes to pricing. I thought the below question may be a good topic for your pricing blog. We offer various promotions throughout the year for different services, some of which may include delivery. One area that comes up continually with any promotion that involves delivery is should a promo period where services are offered for free include free delivery or not. Interested in a pricing experts take on it. Thanks for considering this as a topic and look forward to the insight if it is picked.” I replied:  “I’m happy to share my thoughts but don’t really understand the question. Can you give me more context around the product, market segment and the customers decisions?”  His response: “Thanks Mark, The services in question are payroll services, which is certainly a ‘which one’ product. The market for payroll services is targeted for companies with 10-99 employees. The key decision making timeline for many of these target companies is at the start of a quarter for tax purposes (Jan, […]
Oct 10, 2016 - This came from a reader: “Hey Mark, Hope all is well, the pricing knowledge from the course has certainly helped in many of our team discussions in ‘doing the right thing’ when it comes to pricing. I thought the below question may be a good topic for your pricing blog. We offer various promotions throughout the year for different services, some of which may include delivery. One area that comes up continually with any promotion that involves delivery is should a promo period where services are offered for free include free delivery or not. Interested in a pricing experts take on it. Thanks for considering this as a topic and look forward to the insight if it is picked.” I replied:  “I’m happy to share my thoughts but don’t really understand the question. Can you give me more context around the product, market segment and the customers decisions?”  His response: “Thanks Mark, The services in question are payroll services, which is certainly a ‘which one’ product. The market for payroll services is targeted for companies with 10-99 employees. The key decision making timeline for many of these target companies is at the start of a quarter for tax purposes (Jan, […]
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Pricing Courage
Oct 03, 2016 -   Being a pricing theorist/consultant/coach is much easier than being a pricing practitioner.  As a guide, we pontificate about Value-Based Pricing.  We point out pricing leaks.  We offer suggestions on fixing them all.  Then we leave.  If it worked, we were brilliant.  If it didn’t work, well, obviously the company didn’t implement it properly.  We’ll take the credit and shirk any blame. As a practitioner, you have to stick around and live with the consequences. Nowhere is this more obvious than when you’re pricing a single deal.  A salesperson comes to you with a HUGE deal and says, “the customer needs a 30% discount to make this deal happen.”  What do you do? There are a lot of steps you already know to take: make sure the salesperson is selling on value rather than price; help the salesperson realize the value of your solution to your customer; create new tools to help the sales department sell value; start by offering a smaller discount; and many other things.  But in the end, the purchasing agent is playing hardball and insists on that 30% discount.  They say “take it or leave it.” Do you take the deal or not?  Taking it ensures […]
Oct 03, 2016 -   Being a pricing theorist/consultant/coach is much easier than being a pricing practitioner.  As a guide, we pontificate about Value-Based Pricing.  We point out pricing leaks.  We offer suggestions on fixing them all.  Then we leave.  If it worked, we were brilliant.  If it didn’t work, well, obviously the company didn’t implement it properly.  We’ll take the credit and shirk any blame. As a practitioner, you have to stick around and live with the consequences. Nowhere is this more obvious than when you’re pricing a single deal.  A salesperson comes to you with a HUGE deal and says, “the customer needs a 30% discount to make this deal happen.”  What do you do? There are a lot of steps you already know to take: make sure the salesperson is selling on value rather than price; help the salesperson realize the value of your solution to your customer; create new tools to help the sales department sell value; start by offering a smaller discount; and many other things.  But in the end, the purchasing agent is playing hardball and insists on that 30% discount.  They say “take it or leave it.” Do you take the deal or not?  Taking it ensures […]
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Pricing Yourself
Oct 02, 2016 - Rebecca Kalogeris, Pragmatic Marketing’s VP of Marketing, and I recorded a fun podcast on how to think like a pricing professional when planning your own career.  It was titled, How to Earn a Raise: Lessons from Pricing.  You should listen because it’s fun, but here’s a two word summary: Differentiate yourself! Of course, Seth Godin wrote a timely blog titled Fully Baked  to illustrate exactly this point.  Here are the two most important sentences in his blog. “The average knowledge worker reads fewer than one business book a year.” “On the other hand, the above-average knowledge worker probably reads ten.” Which one do you think makes a higher income over time?  Thanks Seth for the help making this point.  🙂
Oct 02, 2016 - Rebecca Kalogeris, Pragmatic Marketing’s VP of Marketing, and I recorded a fun podcast on how to think like a pricing professional when planning your own career.  It was titled, How to Earn a Raise: Lessons from Pricing.  You should listen because it’s fun, but here’s a two word summary: Differentiate yourself! Of course, Seth Godin wrote a timely blog titled Fully Baked  to illustrate exactly this point.  Here are the two most important sentences in his blog. “The average knowledge worker reads fewer than one business book a year.” “On the other hand, the above-average knowledge worker probably reads ten.” Which one do you think makes a higher income over time?  Thanks Seth for the help making this point.  🙂
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The Power of Pricing Power
Sep 26, 2016 -  In 2011, Warren Buffet told the Financial Crisis Inquiry Commission, “The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.” For now, ignore the words “pricing power” (which are awesome words to a pricing person). Instead focus on his description of it. He says pricing power is having the ability to raise prices at least a little without a huge negative impact on demand. What types of companies or products have that characteristic? That is the million dollar question. Three types of products or companies have this power. First, there are “Will I?” products. If you are a regular reader of PragmaticPricing you know that Will I products are those products where buyers make the decision “am I going to buy this or not?” They don’t choose between competitive products. Examples of Will I products include popcorn at the movie theater, iPhone, Rolex watch, meat grinder option on a kitchen-aid mixer, bottled water in a hotel […]
Sep 26, 2016 -  In 2011, Warren Buffet told the Financial Crisis Inquiry Commission, “The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.” For now, ignore the words “pricing power” (which are awesome words to a pricing person). Instead focus on his description of it. He says pricing power is having the ability to raise prices at least a little without a huge negative impact on demand. What types of companies or products have that characteristic? That is the million dollar question. Three types of products or companies have this power. First, there are “Will I?” products. If you are a regular reader of PragmaticPricing you know that Will I products are those products where buyers make the decision “am I going to buy this or not?” They don’t choose between competitive products. Examples of Will I products include popcorn at the movie theater, iPhone, Rolex watch, meat grinder option on a kitchen-aid mixer, bottled water in a hotel […]
Blog Post
Value Based Pricing in Kentucky
Sep 08, 2016 - This week my wife and I were in Kentucky, the Lexington area.  We went for the bourbon, but of course everything is about pricing.  🙂  We found two specific examples to share with you, bourbon pricing and … shhhh … pricing horse sex. First bourbon.  We went on fascinating tours at three different distilleries.  In every case we could find examples of value based pricing (VBP).  Let’s focus on one, Woodford Reserve.  They have a pretty simple product line, 4 bottles: Distillers Select 750 ml $37.99 Double Oaked 750 ml $56.99 Rye 750 ml $39.99 Distillers Select 1.75 L $69.99 For this example, let’s look at the first two, distillers select 750 and Double Oaked 750.  Notice the double oaked is $19 more than the distillers select.  That is a 50% higher price. To be sure, it does cost them more to make a double oaked.  Here’s how they make one.  They first make a Distillers Select:  create the mash, ferment it, distill it, put it in a barrel, and age it for about 8 years while tasting the barrel along the way.  After it’s ready, instead of bottling it as Distillers Select (which they could), they put it in a second […]
Sep 08, 2016 - This week my wife and I were in Kentucky, the Lexington area.  We went for the bourbon, but of course everything is about pricing.  🙂  We found two specific examples to share with you, bourbon pricing and … shhhh … pricing horse sex. First bourbon.  We went on fascinating tours at three different distilleries.  In every case we could find examples of value based pricing (VBP).  Let’s focus on one, Woodford Reserve.  They have a pretty simple product line, 4 bottles: Distillers Select 750 ml $37.99 Double Oaked 750 ml $56.99 Rye 750 ml $39.99 Distillers Select 1.75 L $69.99 For this example, let’s look at the first two, distillers select 750 and Double Oaked 750.  Notice the double oaked is $19 more than the distillers select.  That is a 50% higher price. To be sure, it does cost them more to make a double oaked.  Here’s how they make one.  They first make a Distillers Select:  create the mash, ferment it, distill it, put it in a barrel, and age it for about 8 years while tasting the barrel along the way.  After it’s ready, instead of bottling it as Distillers Select (which they could), they put it in a second […]
Blog Post
Seth is Wrong about Good, Better, Best
Aug 30, 2016 - For years I’ve read Seth Godin’s blog, daily.  He is awesome.  In all those years I’ve never disagreed with him … until now. Seth’s blog today, Aug. 30 2016, is titled “Features and marginal cost in the digital age”.  He provided the argument that good, better, best for hardware products was based on the marginal cost of adding more features.  He then applied that thinking to digital products:  since there is no marginal cost to the next feature.  The final line of his blog, “Good, better, best is going to have to start being based on something else.” I have to disagree with his premise that good, better, best was always based on cost.  This is the thinking of someone that believes in cost plus pricing.  Even marketers of software products, who know that we don’t price based on the marginal costs of producing the next one, often get caught in the trap of thinking other companies use cost plus pricing.  We do this because we are shoppers.  We see this.  One has to conscientiously force oneself to think otherwise. Early in the morning of a pricing class I emphasize to my students that Costs don’t drive pricing.  Willingness to Pay drives pricing. […]
Aug 30, 2016 - For years I’ve read Seth Godin’s blog, daily.  He is awesome.  In all those years I’ve never disagreed with him … until now. Seth’s blog today, Aug. 30 2016, is titled “Features and marginal cost in the digital age”.  He provided the argument that good, better, best for hardware products was based on the marginal cost of adding more features.  He then applied that thinking to digital products:  since there is no marginal cost to the next feature.  The final line of his blog, “Good, better, best is going to have to start being based on something else.” I have to disagree with his premise that good, better, best was always based on cost.  This is the thinking of someone that believes in cost plus pricing.  Even marketers of software products, who know that we don’t price based on the marginal costs of producing the next one, often get caught in the trap of thinking other companies use cost plus pricing.  We do this because we are shoppers.  We see this.  One has to conscientiously force oneself to think otherwise. Early in the morning of a pricing class I emphasize to my students that Costs don’t drive pricing.  Willingness to Pay drives pricing. […]
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Pricing Epipens, Evil or Brilliant? Lessons You Should Learn
Aug 29, 2016 - EpiPen prices have gone up 400% over the last few years. This has been all over the news and is giving a bad name to Mylan, the company that makes EpiPen. For example, see this interview on CNBC with Mylan CEO Heather Bresch.  As a pricing person, I feel compelled to share my opinion.  These price increases are both brilliant and stupid at the same time. Brilliant:  From a pure pricing and economic perspective, Mylan has been acting very smart.  After all, if the market will pay more, they should charge more.  More details below on what they have been doing right. Stupid:  Face it, Mylan is gouging buyers of this product.  Gouging is a negative term used when the market is used to paying one price and the price goes up dramatically, usually with minimal justification.  Gouging always looks bad, and it looks even worse when we’re talking about people’s health.  As a pricing expert, I avoid pricing in the medical space because it’s not simple economics.  Instead of just focusing on willingness to pay, suddenly there are big ethical questions.  The biggest of all, “Shouldn’t we help more people by having a lower price?”  This complicates the pricing decision immensely. […]
Aug 29, 2016 - EpiPen prices have gone up 400% over the last few years. This has been all over the news and is giving a bad name to Mylan, the company that makes EpiPen. For example, see this interview on CNBC with Mylan CEO Heather Bresch.  As a pricing person, I feel compelled to share my opinion.  These price increases are both brilliant and stupid at the same time. Brilliant:  From a pure pricing and economic perspective, Mylan has been acting very smart.  After all, if the market will pay more, they should charge more.  More details below on what they have been doing right. Stupid:  Face it, Mylan is gouging buyers of this product.  Gouging is a negative term used when the market is used to paying one price and the price goes up dramatically, usually with minimal justification.  Gouging always looks bad, and it looks even worse when we’re talking about people’s health.  As a pricing expert, I avoid pricing in the medical space because it’s not simple economics.  Instead of just focusing on willingness to pay, suddenly there are big ethical questions.  The biggest of all, “Shouldn’t we help more people by having a lower price?”  This complicates the pricing decision immensely. […]
Blog Post
Negative Differentiation: An Example from National Rental Cars
Aug 22, 2016 - An important concept of pricing is to create positive differentiation for your products.  This means making your products better than your competitors.  When you succeed at this, you get to charge a higher price than your competition. However, you must beware of negative differentiation.  These are typically areas where your competitors have innovated faster than you.  They have created differentiation and you haven’t kept up.  Unfortunately another source of negative differentiation is often operations.  Companies put a process in place because it makes it easier for them, without thinking of their customers. The other day I rented a car from National, not my regular company.  The keys they gave me (pictured above) had 3 bulky keys, 2 fobs and a tag.  Am I supposed to carry this around in my pocket?  At home I carry a single key in my pocket.  At my preferred rental company I typically get a single key with fob.  Of course I had this vehicle for 4 days, so every day I thought longer (stewed more) about why they did this to me. Think about it.  There is absolutely zero value to me to carry all of these keys.  If I lose one, I lose them […]
Aug 22, 2016 - An important concept of pricing is to create positive differentiation for your products.  This means making your products better than your competitors.  When you succeed at this, you get to charge a higher price than your competition. However, you must beware of negative differentiation.  These are typically areas where your competitors have innovated faster than you.  They have created differentiation and you haven’t kept up.  Unfortunately another source of negative differentiation is often operations.  Companies put a process in place because it makes it easier for them, without thinking of their customers. The other day I rented a car from National, not my regular company.  The keys they gave me (pictured above) had 3 bulky keys, 2 fobs and a tag.  Am I supposed to carry this around in my pocket?  At home I carry a single key in my pocket.  At my preferred rental company I typically get a single key with fob.  Of course I had this vehicle for 4 days, so every day I thought longer (stewed more) about why they did this to me. Think about it.  There is absolutely zero value to me to carry all of these keys.  If I lose one, I lose them […]
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Pricing at Events
Aug 15, 2016 - The Pragmatic Marketing box of the month for August is Event Support. How does this tie to pricing? It really doesn’t for companies who sell high end equipment with multiple steps in the buyer’s journey. Buyers need to move from being Aware to making a Purchase, which takes time. Also, the main purpose of trades show for these type companies is to build awareness, not close deals. Offering discounts at a trade show may be a motivator to purchase, but only for buyers who are at that stage in their journey. Price discounts at events for complex sales processes is the wrong tool at the wrong time. However, Discounts at events can have a big impact for companies who sell items that people tend to decide on quickly. Typically these products are purchased with cash or credit cards. Sometimes purchase orders are placed at trade shows, especially when manufacturers are exhibiting and resellers are the attendees. Surely you’ve been to a trade show or an event where some exhibitors offer special limited time only prices. These can be very effective. I’ve had the good fortune of attending Interbike, a fun trade show targeted at bicycle retailers. I recall one booth […]
Aug 15, 2016 - The Pragmatic Marketing box of the month for August is Event Support. How does this tie to pricing? It really doesn’t for companies who sell high end equipment with multiple steps in the buyer’s journey. Buyers need to move from being Aware to making a Purchase, which takes time. Also, the main purpose of trades show for these type companies is to build awareness, not close deals. Offering discounts at a trade show may be a motivator to purchase, but only for buyers who are at that stage in their journey. Price discounts at events for complex sales processes is the wrong tool at the wrong time. However, Discounts at events can have a big impact for companies who sell items that people tend to decide on quickly. Typically these products are purchased with cash or credit cards. Sometimes purchase orders are placed at trade shows, especially when manufacturers are exhibiting and resellers are the attendees. Surely you’ve been to a trade show or an event where some exhibitors offer special limited time only prices. These can be very effective. I’ve had the good fortune of attending Interbike, a fun trade show targeted at bicycle retailers. I recall one booth […]
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Commodity is a Dirty Word
Dec 01, 2016 - Too often in class a student will say “I have a commodity.  The market sets my price.”  This is almost never true.  What’s worse is if you believe it, then you’ve given up trying to make higher profits using pricing techniques. If you believe your product is a commodity, then it is very likely that some market segment also believes it’s a commodity, that there’s no difference between your product and your competitors.  If you want to win those customers then you probably have to be price competitive.  But the trick is to go after the OTHER customers.  The ones who don’t think it’s a commodity. Take aspirin.  This product has been around in its current formulation since 1899.  That’s 117 years.  There are no patents.  No intellectual property.  An aspirin is an aspirin is an aspirin.  In other words, an aspirin is a commodity.  Then how does Bayer get away with charging over $6 a bottle when the generics are under $2?  It’s called segmentation. Some people understand aspirin is a commodity, so they rightly purchase on price.  91% of doctors and pharmacists buy the generic brand.  However, the average household buys a brand name like Bayer 26% of […]
Dec 01, 2016 - Too often in class a student will say “I have a commodity.  The market sets my price.”  This is almost never true.  What’s worse is if you believe it, then you’ve given up trying to make higher profits using pricing techniques. If you believe your product is a commodity, then it is very likely that some market segment also believes it’s a commodity, that there’s no difference between your product and your competitors.  If you want to win those customers then you probably have to be price competitive.  But the trick is to go after the OTHER customers.  The ones who don’t think it’s a commodity. Take aspirin.  This product has been around in its current formulation since 1899.  That’s 117 years.  There are no patents.  No intellectual property.  An aspirin is an aspirin is an aspirin.  In other words, an aspirin is a commodity.  Then how does Bayer get away with charging over $6 a bottle when the generics are under $2?  It’s called segmentation. Some people understand aspirin is a commodity, so they rightly purchase on price.  91% of doctors and pharmacists buy the generic brand.  However, the average household buys a brand name like Bayer 26% of […]
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Good, better, best for Gasoline
Nov 08, 2016 - A reader sent in the following: Would be interested in hearing your thoughts on Gas. I usually always by the regular 87 octane at ~$2.00.  The Next level of fuel is +~$.30    I have never bought this.  The premium fuel is +~$.60   I use this every time in my Harley and when I have a high compression engine. Have you ever given any thoughts on marketing and Gas?   I’ve never given it any thought before, but now that you ask … First, a little Internet research shows that only 7% of gasoline purchased in 2005 was mid grade.  That agrees with your experience.  Now let’s explain it. Here are the rules for how people make decisions when faced with a good, better, best product portfolio: If the buyer knows what they need, they buy that. If the buyer is scraping to get into the product category, they buy good. If the buyer purchase is a small portion of their budget and they don’t want to be wrong, they buy best. Everyone else buys better. I’d argue that almost everyone buying gas fits into the first category, they know what they need.  Manufacturers of sports cars tell the […]
Nov 08, 2016 - A reader sent in the following: Would be interested in hearing your thoughts on Gas. I usually always by the regular 87 octane at ~$2.00.  The Next level of fuel is +~$.30    I have never bought this.  The premium fuel is +~$.60   I use this every time in my Harley and when I have a high compression engine. Have you ever given any thoughts on marketing and Gas?   I’ve never given it any thought before, but now that you ask … First, a little Internet research shows that only 7% of gasoline purchased in 2005 was mid grade.  That agrees with your experience.  Now let’s explain it. Here are the rules for how people make decisions when faced with a good, better, best product portfolio: If the buyer knows what they need, they buy that. If the buyer is scraping to get into the product category, they buy good. If the buyer purchase is a small portion of their budget and they don’t want to be wrong, they buy best. Everyone else buys better. I’d argue that almost everyone buying gas fits into the first category, they know what they need.  Manufacturers of sports cars tell the […]
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Higher Prices for More Beer
Oct 24, 2016 - Here is an interesting situation found by a reader of Pragmatic Pricing. Hi Mark, While travelling to Memphis earlier this week for business, I had dinner one evening at BB King’s Blues Club and stumbled upon an interested pricing example. Typically, everyone expects a volume discount, especially at restaurants – “super-size” it and get the large size for just a little bit more – as we all have been conditioned.  It would appear that BB King’s is taking advantage of that conditioning.  I almost ordered the 20 oz. draft beer, but while waiting for a waitress to show up and take my order, I had time to look at the pricing more closely and realized that they were actually charging a premium to get a larger size.  The additional 4 oz. cost $2.00 more or $0.50 per ounce regardless of whether you were ordering a domestic or premium beer.  Clearly the first 16 oz. weren’t priced at that level with domestic costing $0.36 per ounce and premium costing $0.42 per ounce.  The net effect is that the pricing on the 20 oz. beer is 7.8% higher for the domestic and 3.7% higher for the premium compared to the 16 oz. […]
Oct 24, 2016 - Here is an interesting situation found by a reader of Pragmatic Pricing. Hi Mark, While travelling to Memphis earlier this week for business, I had dinner one evening at BB King’s Blues Club and stumbled upon an interested pricing example. Typically, everyone expects a volume discount, especially at restaurants – “super-size” it and get the large size for just a little bit more – as we all have been conditioned.  It would appear that BB King’s is taking advantage of that conditioning.  I almost ordered the 20 oz. draft beer, but while waiting for a waitress to show up and take my order, I had time to look at the pricing more closely and realized that they were actually charging a premium to get a larger size.  The additional 4 oz. cost $2.00 more or $0.50 per ounce regardless of whether you were ordering a domestic or premium beer.  Clearly the first 16 oz. weren’t priced at that level with domestic costing $0.36 per ounce and premium costing $0.42 per ounce.  The net effect is that the pricing on the 20 oz. beer is 7.8% higher for the domestic and 3.7% higher for the premium compared to the 16 oz. […]
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Another Foolish Price Increase – This Time It’s Evernote
Jul 23, 2016 - I just received an email from Evernote that my annual subscription price is going up.  What a mistake.  The email is attached below.  My prediction – this will not go well for Evernote. First, they did do one thing very well.  In the email they say they are charging more for new subscribers than the loyal subscribers new price, at least for a year.  This follows one important lesson when raising prices on current customers, try to do something nice for them.  This is nice. However, here is the big fail.  When companies who have recurring revenue raise prices, they invite their customers to rethink their original decision.  Prior to a price increase, most users just use the product and automatically pay their bills.  They don’t question their original decision.  However, a price increase prompts that questioning. A few weeks ago I wrote about Netflix and how they did their latest price increase MUCH better than the one earlier.  Since then though I’ve read that even they have lost more subscribers than they expected.  Even with a good implementation, they are losing subscribers.  Mind you, their profits increased because the higher price more than made up for the lost subscribers, but their […]
Jul 23, 2016 - I just received an email from Evernote that my annual subscription price is going up.  What a mistake.  The email is attached below.  My prediction – this will not go well for Evernote. First, they did do one thing very well.  In the email they say they are charging more for new subscribers than the loyal subscribers new price, at least for a year.  This follows one important lesson when raising prices on current customers, try to do something nice for them.  This is nice. However, here is the big fail.  When companies who have recurring revenue raise prices, they invite their customers to rethink their original decision.  Prior to a price increase, most users just use the product and automatically pay their bills.  They don’t question their original decision.  However, a price increase prompts that questioning. A few weeks ago I wrote about Netflix and how they did their latest price increase MUCH better than the one earlier.  Since then though I’ve read that even they have lost more subscribers than they expected.  Even with a good implementation, they are losing subscribers.  Mind you, their profits increased because the higher price more than made up for the lost subscribers, but their […]
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Latest Netflix Price Increase – A Customer’s Perspective
Jul 11, 2016 - A good friend sent the following email: Mark Here is a blog subject for you. You can comment on this pricing strategy. I think it is great. First, I believe Netflix is the greatest value product I purchase. Therefore, I do not mind paying $10/month. Second by charging new customers $2 more than me for last 2 years it makes me feel like I was rewarded for being a loyal customer. I have not heard any big clamor about this price increase like I heard ~4 yrs ago when the CEO had to apologize. Your thoughts? – SW Here is the text Netflix sent to SW: Dear SW, When we raised prices for new Netflix members in 2014, we kept your price the same for two years. Your special pricing is now ending and as of 8/1/16 your new price will be $9.99 per month. Please visit netflix.com to review the details of this change and your options for plans and prices. As always, if you have questions, we are happy to help. Please visit the Help Center for more information. –The Netflix Team Once again Netflix got it right!  After their huge pricing fiasco in 2011, they have learned […]
Jul 11, 2016 - A good friend sent the following email: Mark Here is a blog subject for you. You can comment on this pricing strategy. I think it is great. First, I believe Netflix is the greatest value product I purchase. Therefore, I do not mind paying $10/month. Second by charging new customers $2 more than me for last 2 years it makes me feel like I was rewarded for being a loyal customer. I have not heard any big clamor about this price increase like I heard ~4 yrs ago when the CEO had to apologize. Your thoughts? – SW Here is the text Netflix sent to SW: Dear SW, When we raised prices for new Netflix members in 2014, we kept your price the same for two years. Your special pricing is now ending and as of 8/1/16 your new price will be $9.99 per month. Please visit netflix.com to review the details of this change and your options for plans and prices. As always, if you have questions, we are happy to help. Please visit the Help Center for more information. –The Netflix Team Once again Netflix got it right!  After their huge pricing fiasco in 2011, they have learned […]
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Complex Pricing Question
Jul 05, 2016 - Here is a question from a reader. Hi Mark, Thanks for your newsletter, which I read with interest. I have a problem with my pricing. I run a software company and am getting some nice orders from huge companies, mid size companies, and even independent contractors — so there’s the entire spectrum of customers there. But I can’t help feeling that I’m vastly undercharging. Some of my products have no competition. I know this because my customers tell me so — they’re usually so thankful they’ve found a particular product (some can save them hours and hours of work). I got a really nice order from a multinational company recently. That sort of thing should be a game changer (because it doesn’t happen often). But because I’m so inept at pricing, after the discounts they wangled, the whole thing only came to several thousand dollars. I’m sure if I knew what I was doing it could have been 4 times that. Anyway, I’m rambling here, but I feel I could really do with some sage advice, and the sooner the better, because technology changes fast, I don’t know how much longer my products will have any value, and I feel […]
Jul 05, 2016 - Here is a question from a reader. Hi Mark, Thanks for your newsletter, which I read with interest. I have a problem with my pricing. I run a software company and am getting some nice orders from huge companies, mid size companies, and even independent contractors — so there’s the entire spectrum of customers there. But I can’t help feeling that I’m vastly undercharging. Some of my products have no competition. I know this because my customers tell me so — they’re usually so thankful they’ve found a particular product (some can save them hours and hours of work). I got a really nice order from a multinational company recently. That sort of thing should be a game changer (because it doesn’t happen often). But because I’m so inept at pricing, after the discounts they wangled, the whole thing only came to several thousand dollars. I’m sure if I knew what I was doing it could have been 4 times that. Anyway, I’m rambling here, but I feel I could really do with some sage advice, and the sooner the better, because technology changes fast, I don’t know how much longer my products will have any value, and I feel […]
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The Will I? Which One? Product Continuum
Jun 22, 2016 -   Understanding the concepts of Will I? and Which one? provides business people with a valuable framework to think about pricing … and even create new products. We always talk about Will I? and Which one? as if it is one or the other, but applying this concept to products it is probably more of a continuum. First, let’s review the concept. When customers make a purchase decision, they typically make two decisions, Will I? and Which one? The Will I? decision is will I buy something in the product category. After they have said yes to Will I? they then answer the question Which one will I buy? Most purchases are made only after answering both questions. However, sometimes people buy after only making the Will I? decision. It is extremely valuable for companies to understand when this happens because buyers who only make the Will I? decision are less price sensitive. Companies should be able to charge higher prices. The decision that occurs just before purchase is not a continuum. A buyer either purchased after making the Will I? decision or after the Which one? decision. Which decision they addressed is binary. The best way for companies to use this concept […]
Jun 22, 2016 -   Understanding the concepts of Will I? and Which one? provides business people with a valuable framework to think about pricing … and even create new products. We always talk about Will I? and Which one? as if it is one or the other, but applying this concept to products it is probably more of a continuum. First, let’s review the concept. When customers make a purchase decision, they typically make two decisions, Will I? and Which one? The Will I? decision is will I buy something in the product category. After they have said yes to Will I? they then answer the question Which one will I buy? Most purchases are made only after answering both questions. However, sometimes people buy after only making the Will I? decision. It is extremely valuable for companies to understand when this happens because buyers who only make the Will I? decision are less price sensitive. Companies should be able to charge higher prices. The decision that occurs just before purchase is not a continuum. A buyer either purchased after making the Will I? decision or after the Which one? decision. Which decision they addressed is binary. The best way for companies to use this concept […]
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Can Thought Leadership Drive Higher Prices?
Jun 11, 2016 - If you have a thought leadership program, it’s probably not because you are trying to drive prices higher. You’re publishing thought leadership pieces to build awareness of your product or product category, enhance SEO so shoppers can find you, or create a reputation as an expert in your field. And yet, another reason should be you can increase your prices. Well executed thought leadership drives higher willingness to pay for both Will I? and Which One? type products. Let’s start with Which One?. A Which One? product is one where you have competition. Your buyers are choosing between your product or a competitors. They make their choice by trading off differences in capabilities against the difference in price. These capabilities can be features, perceived quality, brand, trust, or anything else the buyer uses when making the choice. On the other hand, thought leadership is there to help buyers who want to learn about a product category. Thought leadership often consists of high level pieces that help economic buyers understand the advantages of solving a problem, different approaches that may be taken, expected return on investment, and even some pitfalls to avoid. Executed well, thought leadership doesn’t blatantly or aggressively sell […]
Jun 11, 2016 - If you have a thought leadership program, it’s probably not because you are trying to drive prices higher. You’re publishing thought leadership pieces to build awareness of your product or product category, enhance SEO so shoppers can find you, or create a reputation as an expert in your field. And yet, another reason should be you can increase your prices. Well executed thought leadership drives higher willingness to pay for both Will I? and Which One? type products. Let’s start with Which One?. A Which One? product is one where you have competition. Your buyers are choosing between your product or a competitors. They make their choice by trading off differences in capabilities against the difference in price. These capabilities can be features, perceived quality, brand, trust, or anything else the buyer uses when making the choice. On the other hand, thought leadership is there to help buyers who want to learn about a product category. Thought leadership often consists of high level pieces that help economic buyers understand the advantages of solving a problem, different approaches that may be taken, expected return on investment, and even some pitfalls to avoid. Executed well, thought leadership doesn’t blatantly or aggressively sell […]
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Pricing Frame of Mind
Jun 02, 2016 - Over 30 years ago, a young woman broke my heart. To be clear, she ripped it out and stomped on it. I struggled to understand why someone would do that to me. It made no sense. I struggled with this until my mom helped me realize she didn’t do this “to me”. She did this “for herself”. That’s when I started creating one of my life philosophy’s, everybody does everything in their own self interest. You may argue with this. You may even find edge cases where this isn’t true. But this philosophy has served me extremely well. (I later learned in economics this is called utility theory.) I learned I can’t tell anyone what to do, but I could find or create situations where people wanted to make the decision I wanted them to make. I found ways to align their goals and mine.  It’s really about predicting and influencing decisions. I was lucky enough to internalize utility theory at an early age. This has been a huge asset in my pricing journey. You see, as pricers, we need to understand how people make decisions (in their own self interest), especially how they use price in those decisions, and […]
Jun 02, 2016 - Over 30 years ago, a young woman broke my heart. To be clear, she ripped it out and stomped on it. I struggled to understand why someone would do that to me. It made no sense. I struggled with this until my mom helped me realize she didn’t do this “to me”. She did this “for herself”. That’s when I started creating one of my life philosophy’s, everybody does everything in their own self interest. You may argue with this. You may even find edge cases where this isn’t true. But this philosophy has served me extremely well. (I later learned in economics this is called utility theory.) I learned I can’t tell anyone what to do, but I could find or create situations where people wanted to make the decision I wanted them to make. I found ways to align their goals and mine.  It’s really about predicting and influencing decisions. I was lucky enough to internalize utility theory at an early age. This has been a huge asset in my pricing journey. You see, as pricers, we need to understand how people make decisions (in their own self interest), especially how they use price in those decisions, and […]
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Should Government Set Airline Seat Sizes? A Pricing Perspective
May 19, 2016 - Sen. Chuck Schumer wants to require the Federal Aviation Administration to establish seat-size standards for commercial airlines, which he says now force passengers to sit on planes “like sardines.” (See the article here.) This blog isn’t about the politics of the situation, rather I focus on the interesting pricing implication. At first glance, this doesn’t seem necessary.  After all, many airlines are now offering three levels of seating.   I’m most familiar with American, so let’s just focus on them. First class – The seats are large, comfortable and there is plenty of legroom.  They typically have 4 seats across total.  Oh, and they are expensive.  A roundtrip flight a month from now from SFO to LGA costs $1247 in first class. Choice (Economy) – This is the back of the plane.  6 seats across, very little legroom.  The same SFO to LGA flight is $560. Main Cabin Extra – for an additional $260 (or a total of $820) you could sit toward the front of the main cabin where they give you up to 6 inches of extra legroom. Here’s the point.  If people want more legroom, they can pay for seats that have more legroom.  The options are […]
May 19, 2016 - Sen. Chuck Schumer wants to require the Federal Aviation Administration to establish seat-size standards for commercial airlines, which he says now force passengers to sit on planes “like sardines.” (See the article here.) This blog isn’t about the politics of the situation, rather I focus on the interesting pricing implication. At first glance, this doesn’t seem necessary.  After all, many airlines are now offering three levels of seating.   I’m most familiar with American, so let’s just focus on them. First class – The seats are large, comfortable and there is plenty of legroom.  They typically have 4 seats across total.  Oh, and they are expensive.  A roundtrip flight a month from now from SFO to LGA costs $1247 in first class. Choice (Economy) – This is the back of the plane.  6 seats across, very little legroom.  The same SFO to LGA flight is $560. Main Cabin Extra – for an additional $260 (or a total of $820) you could sit toward the front of the main cabin where they give you up to 6 inches of extra legroom. Here’s the point.  If people want more legroom, they can pay for seats that have more legroom.  The options are […]
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Make More Money By Applying Pricing Concepts to Yourself
May 27, 2016 - Do you want to make more money?  Get a raise?  Be valued by your employer or your customers?  Of course you do.  What a stupid question.  Here’s how. Turns out, if you understand pricing, you know the answer to this question.  Think about it.  You are a product!  A product that your employer purchases. You have a bundle of capabilities and attributes and they pay you money in exchange for your capabilities.  You are a product. Remember when people buy products, they make both the Will I? and the Which One? decisions.   Will I buy something in this product category and if yes, then which one?  Some products are purchased immediately after the Will I? decision, without ever asking which one?  This happens for products with monopolies, great brand names, luxury goods, specialty items, first to market products and others.  In each of these cases, the products tend to be more expensive.  Why?  Buyers are much less price sensitive when purchasing a Will I? only type product.  (You can learn more from my earliest blogs.) From an employer perspective, are you the ONLY person who can do your job?  If so, you are a will I? product and should be […]
May 27, 2016 - Do you want to make more money?  Get a raise?  Be valued by your employer or your customers?  Of course you do.  What a stupid question.  Here’s how. Turns out, if you understand pricing, you know the answer to this question.  Think about it.  You are a product!  A product that your employer purchases. You have a bundle of capabilities and attributes and they pay you money in exchange for your capabilities.  You are a product. Remember when people buy products, they make both the Will I? and the Which One? decisions.   Will I buy something in this product category and if yes, then which one?  Some products are purchased immediately after the Will I? decision, without ever asking which one?  This happens for products with monopolies, great brand names, luxury goods, specialty items, first to market products and others.  In each of these cases, the products tend to be more expensive.  Why?  Buyers are much less price sensitive when purchasing a Will I? only type product.  (You can learn more from my earliest blogs.) From an employer perspective, are you the ONLY person who can do your job?  If so, you are a will I? product and should be […]
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Segmentation for Pilgrims? Not really
May 11, 2016 - Kiru, a loyal reader sent a lengthy email email describing a unique price segmentation execution.  His entire email is below, but the gist is that there is huge demand for an accommodation near a Hindu temple near Chennai India.  The rooms sell out in 4-5 hours after becoming available.  And yet, the pricing goes like this: First two days, $10 per day Third day, $20 for the day Fourth day, $40 for the day Kiru summarized: “I see this is really good strategy adopted by them to satisfy all category of people by giving rest house to most of people, manage demand of rooms and get more revenue through this price segmentation.  But I feel 100% price increase on each day is not good idea. What do you think about this?” There is more than value based pricing and price segmentation going on here. True this is price segmentation.  Only people who can afford to stay longer will stay longer, so they are getting those people to pay more. However, this does not really feel like value based pricing to me.  Let’s define value based pricing as charging what your customer is willing to pay.  Since the rooms sell out extremely […]
May 11, 2016 - Kiru, a loyal reader sent a lengthy email email describing a unique price segmentation execution.  His entire email is below, but the gist is that there is huge demand for an accommodation near a Hindu temple near Chennai India.  The rooms sell out in 4-5 hours after becoming available.  And yet, the pricing goes like this: First two days, $10 per day Third day, $20 for the day Fourth day, $40 for the day Kiru summarized: “I see this is really good strategy adopted by them to satisfy all category of people by giving rest house to most of people, manage demand of rooms and get more revenue through this price segmentation.  But I feel 100% price increase on each day is not good idea. What do you think about this?” There is more than value based pricing and price segmentation going on here. True this is price segmentation.  Only people who can afford to stay longer will stay longer, so they are getting those people to pay more. However, this does not really feel like value based pricing to me.  Let’s define value based pricing as charging what your customer is willing to pay.  Since the rooms sell out extremely […]
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Price Segmentation Example – Good or Bad?
Apr 13, 2016 - Heartwood and Oak sent a friend of mine two separate emails with the same offering at two different prices.  To be fair, they thought she was two different people. She had purchased from them in the past using two different email addresses and two different shipping addresses. What a great opportunity to analyze a price segmentation example.  First, let’s try to figure out why they thought these two customers had two different willingnesses to pay.  Here are the differences between the two “people”. $84 Ad: email address was google.com; purchase history was a single case; shipping address was Mountain View, CA. $90 Ad: email address was gmail.com; purchase history was several cases; shipping address was Los Altos Hills, CA. Can we make sense of this?  First, the discount was to a Google employee (google.com email address). Google employees are probably better off than the average person, so that doesn’t make sense as the justification for a discount.  That may be different if Google was providing the opportunity to market to all of their employees, which was not the case here. The discount went to the lower historical purchase volume.  I sincerely hope this isn’t what drove their pricing.  Although it is true that loyal […]
Apr 13, 2016 - Heartwood and Oak sent a friend of mine two separate emails with the same offering at two different prices.  To be fair, they thought she was two different people. She had purchased from them in the past using two different email addresses and two different shipping addresses. What a great opportunity to analyze a price segmentation example.  First, let’s try to figure out why they thought these two customers had two different willingnesses to pay.  Here are the differences between the two “people”. $84 Ad: email address was google.com; purchase history was a single case; shipping address was Mountain View, CA. $90 Ad: email address was gmail.com; purchase history was several cases; shipping address was Los Altos Hills, CA. Can we make sense of this?  First, the discount was to a Google employee (google.com email address). Google employees are probably better off than the average person, so that doesn’t make sense as the justification for a discount.  That may be different if Google was providing the opportunity to market to all of their employees, which was not the case here. The discount went to the lower historical purchase volume.  I sincerely hope this isn’t what drove their pricing.  Although it is true that loyal […]
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Pricing Effectiveness
Apr 05, 2016 - Pragmatic Marketing’s Box of the Month is Program Effectiveness. Let’s interpret that to mean how effective is our pricing? Since pricing is such a huge topic, pricing effectiveness is equally huge. We would have to look at every area of pricing and ask how we’re doing. For example, pricing includes setting list prices, negotiating prices with customers, quoting prices to buyers and more. This is a great place to get finance involved with pricing. Your finance team probably wants to be involved because they want higher ASP’s and margins but they do not have the understanding of the value to the customer necessary to effectively set prices. Yet what they are great at is monitoring, creating reports and insightful thinking. Let’s enlist the finance team to monitor and create reports so they can help us improve our pricing. The following reports are often very valuable at monitoring pricing effectiveness. Scatterplot. For a product, plot price on the y-axis and on the x-axis whatever characteristic you believe should drive discount behavior. For hardware products this is almost always quantity. For software it is often deal size, number of seats, number of transactions, etc. You are looking for the outliers, where we […]
Apr 05, 2016 - Pragmatic Marketing’s Box of the Month is Program Effectiveness. Let’s interpret that to mean how effective is our pricing? Since pricing is such a huge topic, pricing effectiveness is equally huge. We would have to look at every area of pricing and ask how we’re doing. For example, pricing includes setting list prices, negotiating prices with customers, quoting prices to buyers and more. This is a great place to get finance involved with pricing. Your finance team probably wants to be involved because they want higher ASP’s and margins but they do not have the understanding of the value to the customer necessary to effectively set prices. Yet what they are great at is monitoring, creating reports and insightful thinking. Let’s enlist the finance team to monitor and create reports so they can help us improve our pricing. The following reports are often very valuable at monitoring pricing effectiveness. Scatterplot. For a product, plot price on the y-axis and on the x-axis whatever characteristic you believe should drive discount behavior. For hardware products this is almost always quantity. For software it is often deal size, number of seats, number of transactions, etc. You are looking for the outliers, where we […]
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Product People Who Price Earn More (and other interesting findings)
Mar 22, 2016 - Pragmatic Marketing recently published results from their 2015 survey of product manager. With over 2000 responses, the data is pretty interesting. See the published results here. Pragmatic gave me access to the raw data to find anything interesting in the world of pricing. Here is blog number 1. Over 2000 people in product teams filled out our survey. I was specifically interested in the answer to the question “Which of the following business activities are your responsibility? Check all that apply: setting and maintaining pricing”. 757 out of 2087 product people claimed this was one of their responsibilities. This was 36%. What does the data say about these 36%? As we go through the other characteristics that had possibly interesting information, I will give you the percentage that claimed yes to this category. Anything significantly over 36% indicates there’s a tendency for that attribute to be correlated with managing pricing. For example, gender. 1336 respondents claimed to be male and 534 of them managed pricing. 40% of males manage pricing. The data showed 29% of females managed pricing. Hence, being male is correlated with pricing. (I’m not making any guesses as to causality on this one.) Age is very highly correlated […]
Mar 22, 2016 - Pragmatic Marketing recently published results from their 2015 survey of product manager. With over 2000 responses, the data is pretty interesting. See the published results here. Pragmatic gave me access to the raw data to find anything interesting in the world of pricing. Here is blog number 1. Over 2000 people in product teams filled out our survey. I was specifically interested in the answer to the question “Which of the following business activities are your responsibility? Check all that apply: setting and maintaining pricing”. 757 out of 2087 product people claimed this was one of their responsibilities. This was 36%. What does the data say about these 36%? As we go through the other characteristics that had possibly interesting information, I will give you the percentage that claimed yes to this category. Anything significantly over 36% indicates there’s a tendency for that attribute to be correlated with managing pricing. For example, gender. 1336 respondents claimed to be male and 534 of them managed pricing. 40% of males manage pricing. The data showed 29% of females managed pricing. Hence, being male is correlated with pricing. (I’m not making any guesses as to causality on this one.) Age is very highly correlated […]
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The Role of Boards in Pricing – Part 2
Mar 02, 2016 - Last week we justified why boards should pay attention to pricing. This week we give some additional question areas where their curiosity could drive companies into making more money. Here are the three questions from last week: – Can we clearly articulate the different market segments, key competitors in each segment and how buyers choose between us and the competition? – Do we have a clear price segmentation strategy? This should be both between market segments and within a market segment. – Are we building “Will I?” type products? Today’s question are more organizational in nature. – Are pricing roles and responsibilities clearly understood? Pricing, one of the most powerful levers in the company, needs to be well managed. In many companies this is haphazard, not well thought out. A board member should be able to see the pricing organization. Is there a pricing council coordinating the different roles and making the big decisions? Is pricing authority clearly laid out? In each of these roles, is there an effort to make them more effective? Of course the board isn’t making any of these decisions. Rather they want to know that the pricing organization is well thought out. – Are we […]
Mar 02, 2016 - Last week we justified why boards should pay attention to pricing. This week we give some additional question areas where their curiosity could drive companies into making more money. Here are the three questions from last week: – Can we clearly articulate the different market segments, key competitors in each segment and how buyers choose between us and the competition? – Do we have a clear price segmentation strategy? This should be both between market segments and within a market segment. – Are we building “Will I?” type products? Today’s question are more organizational in nature. – Are pricing roles and responsibilities clearly understood? Pricing, one of the most powerful levers in the company, needs to be well managed. In many companies this is haphazard, not well thought out. A board member should be able to see the pricing organization. Is there a pricing council coordinating the different roles and making the big decisions? Is pricing authority clearly laid out? In each of these roles, is there an effort to make them more effective? Of course the board isn’t making any of these decisions. Rather they want to know that the pricing organization is well thought out. – Are we […]
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More Insights About Product Managers with Pricing Responsibility
Mar 28, 2016 - Last week I wrote about the characteristics of product managers who have pricing responsibility as deduced from data from Pragmatic Marketing’s 2015 annual survey. This week let’s dive into the minds of these product people. As a quick reminder, over 2000 people in product teams filled out our survey. I was specifically interested in the answer to the question “Which of the following business activities are your responsibility? Check all that apply: setting and maintaining pricing”. 757 out of 2087 product people claimed this was one of their responsibilities. This was 36%. 36% is our benchmark as we look for other insights. The type of product managed is a big indicator of who does pricing. 49% of product people in hardware companies have that responsibility. This is almost certainly due to the fact that hardware companies tend to (incorrectly) use cost plus pricing. Since the product manager manages the cost, he or she also manages the price. Ugh. In the worlds of software, cloud and professional services, the number hovers around the 36% point. The industry also seemed to be a good indicator. The following industries were well above the average: Agriculture and food services, manufacturing, and construction with 57%, […]
Mar 28, 2016 - Last week I wrote about the characteristics of product managers who have pricing responsibility as deduced from data from Pragmatic Marketing’s 2015 annual survey. This week let’s dive into the minds of these product people. As a quick reminder, over 2000 people in product teams filled out our survey. I was specifically interested in the answer to the question “Which of the following business activities are your responsibility? Check all that apply: setting and maintaining pricing”. 757 out of 2087 product people claimed this was one of their responsibilities. This was 36%. 36% is our benchmark as we look for other insights. The type of product managed is a big indicator of who does pricing. 49% of product people in hardware companies have that responsibility. This is almost certainly due to the fact that hardware companies tend to (incorrectly) use cost plus pricing. Since the product manager manages the cost, he or she also manages the price. Ugh. In the worlds of software, cloud and professional services, the number hovers around the 36% point. The industry also seemed to be a good indicator. The following industries were well above the average: Agriculture and food services, manufacturing, and construction with 57%, […]
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The Role of Boards in Pricing – Part 1
Feb 23, 2016 - A Board of Directors has several important roles, one of which is oversight of the company’s performance.  Boards can choose what they want to be involved with, but obviously it makes no sense at all for a board to be involved with the minutia of running a company.  Yet, many boards get involved with cybersecurity.  Is it minutia or is it critical?  It’s minutia until something goes wrong. If cybersecurity is important enough for boards, then the question comes about, should boards be involved with pricing?  At first glance, pricing feels like too much minutia, too deep in the weeds.  On the other hand, pricing is a powerful weapon.  It is the most powerful tool available to marketing.  Pricing is a key indicator of how well the company creates new products. Knowledge of pricing is an amazing indicator that the company understands their product value, their customers and their competitors. A clear understanding of pricing indicates a clear understanding of the business.  So yes, Boards should monitor pricing.  However, the board should monitor the internal pricing practices and capabilities (not doing pricing). There are several key areas boards should be questioning.  Here are three of them.  More will be discussed […]
Feb 23, 2016 - A Board of Directors has several important roles, one of which is oversight of the company’s performance.  Boards can choose what they want to be involved with, but obviously it makes no sense at all for a board to be involved with the minutia of running a company.  Yet, many boards get involved with cybersecurity.  Is it minutia or is it critical?  It’s minutia until something goes wrong. If cybersecurity is important enough for boards, then the question comes about, should boards be involved with pricing?  At first glance, pricing feels like too much minutia, too deep in the weeds.  On the other hand, pricing is a powerful weapon.  It is the most powerful tool available to marketing.  Pricing is a key indicator of how well the company creates new products. Knowledge of pricing is an amazing indicator that the company understands their product value, their customers and their competitors. A clear understanding of pricing indicates a clear understanding of the business.  So yes, Boards should monitor pricing.  However, the board should monitor the internal pricing practices and capabilities (not doing pricing). There are several key areas boards should be questioning.  Here are three of them.  More will be discussed […]
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Should You Include Upgrades or Charge for Them?
Feb 02, 2016 - Three times in the last few months I’ve been asked a version of the question, “should we charge for new capabilities or include them in the standard product?” Here is one of those questions and my response: What are your thoughts on building great visionary products but instead of charging for them the company includes them in the core product bundle? They view this as a membership concept and then just try and charge more at renewal time because they put so many cool things in the product! Curious how you would talk them out of this model?   Here are my thoughts: First, if you simply give the new products or features away, then your customers will come to expect them. Later in the year when you want to raise prices, you will upset your customers. They won’t justify the price increase with the new features because they are already part of the package.  You just gave the feature to them. Hence, you will find it challenging to raise prices. Second, I assume some of your customers value your new capabilities more than other customers. We should find ways to get them to pay different prices. You are now […]
Feb 02, 2016 - Three times in the last few months I’ve been asked a version of the question, “should we charge for new capabilities or include them in the standard product?” Here is one of those questions and my response: What are your thoughts on building great visionary products but instead of charging for them the company includes them in the core product bundle? They view this as a membership concept and then just try and charge more at renewal time because they put so many cool things in the product! Curious how you would talk them out of this model?   Here are my thoughts: First, if you simply give the new products or features away, then your customers will come to expect them. Later in the year when you want to raise prices, you will upset your customers. They won’t justify the price increase with the new features because they are already part of the package.  You just gave the feature to them. Hence, you will find it challenging to raise prices. Second, I assume some of your customers value your new capabilities more than other customers. We should find ways to get them to pay different prices. You are now […]
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Pricing When Sales Are Down
Feb 10, 2016 - Scott Francis of Strategic Pricing Solutions wrote an excellent article titled “When Size Matters” to explain why Coke and Pepsi are offering smaller sizes of sodas. I highly recommend you read his well written article.  To quickly summarize, demand for sugary sodas is declining, so Coke & Pepsi created smaller sizes at lower prices (higher per ounce prices, of course). Yet the reason isn’t so obvious.  As Scott points out, it wasn’t just a tactic to lower price to hopefully sustain demand.  Instead, it was a carefully crafted strategy to solve an unmet need in the market.  Many more people are health conscious and don’t want to drink large quantities of soda.  Hence, the smaller servings allow fans to indulge without drinking too much. Coke and Pepsi didn’t just lower prices to keep their sales up, they looked for and discovered changing market preferences which they then addressed with a new product and new price for the new market. Like Coke and Pepsi, we often face bad market conditions that result in declining sales.  Maybe a new competitor enters the market, maybe the market turns bad, maybe tastes change.  Regardless of the reason, what we see is declining sales in both units and […]
Feb 10, 2016 - Scott Francis of Strategic Pricing Solutions wrote an excellent article titled “When Size Matters” to explain why Coke and Pepsi are offering smaller sizes of sodas. I highly recommend you read his well written article.  To quickly summarize, demand for sugary sodas is declining, so Coke & Pepsi created smaller sizes at lower prices (higher per ounce prices, of course). Yet the reason isn’t so obvious.  As Scott points out, it wasn’t just a tactic to lower price to hopefully sustain demand.  Instead, it was a carefully crafted strategy to solve an unmet need in the market.  Many more people are health conscious and don’t want to drink large quantities of soda.  Hence, the smaller servings allow fans to indulge without drinking too much. Coke and Pepsi didn’t just lower prices to keep their sales up, they looked for and discovered changing market preferences which they then addressed with a new product and new price for the new market. Like Coke and Pepsi, we often face bad market conditions that result in declining sales.  Maybe a new competitor enters the market, maybe the market turns bad, maybe tastes change.  Regardless of the reason, what we see is declining sales in both units and […]
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Don’t Blame Sales for Discounts – It’s Your Fault
Jan 22, 2016 - Salespeople frequently (way too often) offer discounts.  That’s a fact of business.  It may be fun to make fun of salespeople, but in truth they are just doing their job.  To be brutally honest, they ask for discounts because you haven’t done your job well enough. Turns out customers, especially those who deal with direct salespeople, almost always ask for discounts.  It’s their job.  Salespeople then take this information and either decide to hold firm on price (not that common), give a discount if they have the authority, or decide to ask for a lower rate from whoever does have the authority. Sales people are most likely to give or ask for the discount.  They would rather close the deal sooner rather than risk losing the deal altogether.  This is true even when sales is paid a commission.  A flat commission on a smaller revenue number means lower commission.  Yet sales still tend to go for the discount. There are two solutions to this dilemma, only one of which you can probably control. The first solution, which takes executive and sales leadership to drive, is to change the compensation of the sales force.  One solution that works relatively well is to set a target […]
Jan 22, 2016 - Salespeople frequently (way too often) offer discounts.  That’s a fact of business.  It may be fun to make fun of salespeople, but in truth they are just doing their job.  To be brutally honest, they ask for discounts because you haven’t done your job well enough. Turns out customers, especially those who deal with direct salespeople, almost always ask for discounts.  It’s their job.  Salespeople then take this information and either decide to hold firm on price (not that common), give a discount if they have the authority, or decide to ask for a lower rate from whoever does have the authority. Sales people are most likely to give or ask for the discount.  They would rather close the deal sooner rather than risk losing the deal altogether.  This is true even when sales is paid a commission.  A flat commission on a smaller revenue number means lower commission.  Yet sales still tend to go for the discount. There are two solutions to this dilemma, only one of which you can probably control. The first solution, which takes executive and sales leadership to drive, is to change the compensation of the sales force.  One solution that works relatively well is to set a target […]
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Win/Loss Data Analysis for Pricing
Jan 27, 2016 - Pragmatic Marketing emphasizes the importance of win/loss analysis. You can learn so much by listening to your buyers, especially right after they have made the decision on what to purchase. Regardless how valuable these win/loss visits are, they are not the topic of this blog. Today, we are looking at win/loss data, which has nothing to do with visiting buyers after each closed deal. Rather the data typically come from normal operations. For this to be useful, you need to be collecting the right data, constantly. Every opportunity we quote is a data point. For each quote we want to collect the price quoted and the quantity quoted. Later, you will go back and determine if you won or lost the business as an additional datapoint. If possible, you also want to collect data on who the competitor was and how much they charged. Then collect data on anything that you think might influence your buyers’ purchase decisions. For example, day of week, weather, time of day, where they are in their budget cycle, etc. We never know what is valuable, so the more data we can systematically (and automatically) collect the better our analysis will be. Once you’ve put […]
Jan 27, 2016 - Pragmatic Marketing emphasizes the importance of win/loss analysis. You can learn so much by listening to your buyers, especially right after they have made the decision on what to purchase. Regardless how valuable these win/loss visits are, they are not the topic of this blog. Today, we are looking at win/loss data, which has nothing to do with visiting buyers after each closed deal. Rather the data typically come from normal operations. For this to be useful, you need to be collecting the right data, constantly. Every opportunity we quote is a data point. For each quote we want to collect the price quoted and the quantity quoted. Later, you will go back and determine if you won or lost the business as an additional datapoint. If possible, you also want to collect data on who the competitor was and how much they charged. Then collect data on anything that you think might influence your buyers’ purchase decisions. For example, day of week, weather, time of day, where they are in their budget cycle, etc. We never know what is valuable, so the more data we can systematically (and automatically) collect the better our analysis will be. Once you’ve put […]
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Pricing Help for Pricing People
Jan 15, 2016 - I had an interesting email from a pricing friend of mine asking for pricing advice.  Before sharing his email and my response, here is a quick story to show how hard this can be. In 2011 I published my pricing book and started giving keynote addresses.  All of my early speeches were for free.  Then one client asked the hardest question ever, “How much do you charge?”  I was dumbfounded.  Here I was, a pricing “expert” unable to answer that one question.  I had to phone a friend.  His advice was to step back, think about the basic pricing principles and apply them.  Great if not obvious advice. I did the work, picked a price and won that gig, which probably means I underpriced it.  The point is, even pricing people need help, especially when it comes to our own incomes. Now for the email: Hi Mark: Wonder if you can help me. We are in a tough bidding situation to win some consulting work. We and the competitor (another well known pricing firm) have both met with the client and concurrently trained the prospective client to educate them on Value-based pricing, how they can improve upon their pricing practices and […]
Jan 15, 2016 - I had an interesting email from a pricing friend of mine asking for pricing advice.  Before sharing his email and my response, here is a quick story to show how hard this can be. In 2011 I published my pricing book and started giving keynote addresses.  All of my early speeches were for free.  Then one client asked the hardest question ever, “How much do you charge?”  I was dumbfounded.  Here I was, a pricing “expert” unable to answer that one question.  I had to phone a friend.  His advice was to step back, think about the basic pricing principles and apply them.  Great if not obvious advice. I did the work, picked a price and won that gig, which probably means I underpriced it.  The point is, even pricing people need help, especially when it comes to our own incomes. Now for the email: Hi Mark: Wonder if you can help me. We are in a tough bidding situation to win some consulting work. We and the competitor (another well known pricing firm) have both met with the client and concurrently trained the prospective client to educate them on Value-based pricing, how they can improve upon their pricing practices and […]
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Why Are Women’s Products More Expensive than Men’s?
Jan 05, 2016 - Every year or so we see another article documenting how women’s prices are mostly higher than men’s.  Here’s the latest one from the Washington Post that prompted this blog post.  One meaningful pull quote from the article: “The New York City Department of Consumer Affairs compared nearly 800 products with female and male versions — meaning they were practically identical except for the gender-specific packaging — and uncovered a persistent surcharge for one of the sexes. Controlling for quality, items marketed to girls and women cost an average 7 percent more than similar products aimed at boys and men.” Let’s accept that this is simply true.  Now the question is why? First, I can assure you that nobody is sitting at Target’s corporate headquarters saying we should charge women more.  There is nothing nefarious going on.  In fact, if they could charge more for men’s products and get away with it, they would. That last sentence provided the key, they can get away with it.  In the end it’s because women are willing to pay more than men are.  This sounds ridiculous but it is the most plausible explanation. Retailers nowadays use sophisticated pricing software where they can adjust the price of an item and see what […]
Jan 05, 2016 - Every year or so we see another article documenting how women’s prices are mostly higher than men’s.  Here’s the latest one from the Washington Post that prompted this blog post.  One meaningful pull quote from the article: “The New York City Department of Consumer Affairs compared nearly 800 products with female and male versions — meaning they were practically identical except for the gender-specific packaging — and uncovered a persistent surcharge for one of the sexes. Controlling for quality, items marketed to girls and women cost an average 7 percent more than similar products aimed at boys and men.” Let’s accept that this is simply true.  Now the question is why? First, I can assure you that nobody is sitting at Target’s corporate headquarters saying we should charge women more.  There is nothing nefarious going on.  In fact, if they could charge more for men’s products and get away with it, they would. That last sentence provided the key, they can get away with it.  In the end it’s because women are willing to pay more than men are.  This sounds ridiculous but it is the most plausible explanation. Retailers nowadays use sophisticated pricing software where they can adjust the price of an item and see what […]
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Pricing is … How Buyers Compare Value
Nov 10, 2015 - Let’s simplify the world into experts and the naive. Of course there are many shades of gray, some say 50, but for now let’s go with black and white. Experts use price to compare value by considering the price differences between two offerings, considering the attribute differences between the same products, and then deciding if the one that costs more is worth it.  They know so they make a (mostly) logical decision. The naive behave differently. For them to know if the price difference is worth it, they would have to research and understand all of the differences in features and capabilities. That’s a lot of work. Instead, they use signals and clues. They might look at packaging, the retailer who is selling it, or even third party testimonials. However, one of the largest signals is price. Using price to infer quality is extremely common. Think of wine. One bottle costs $10, another $20. Which is better? Odds are good you haven’t tasted them both. You don’t REALLY know. You guess. One indicator to help you is the price. In a way using price to indicate quality is very rational. I do it all the time. Here’s the thinking: many […]
Nov 10, 2015 - Let’s simplify the world into experts and the naive. Of course there are many shades of gray, some say 50, but for now let’s go with black and white. Experts use price to compare value by considering the price differences between two offerings, considering the attribute differences between the same products, and then deciding if the one that costs more is worth it.  They know so they make a (mostly) logical decision. The naive behave differently. For them to know if the price difference is worth it, they would have to research and understand all of the differences in features and capabilities. That’s a lot of work. Instead, they use signals and clues. They might look at packaging, the retailer who is selling it, or even third party testimonials. However, one of the largest signals is price. Using price to infer quality is extremely common. Think of wine. One bottle costs $10, another $20. Which is better? Odds are good you haven’t tasted them both. You don’t REALLY know. You guess. One indicator to help you is the price. In a way using price to indicate quality is very rational. I do it all the time. Here’s the thinking: many […]
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Pricing and Positioning – Are They Related?
Oct 25, 2015 - Pragmatic Marketing’s Box of the Month is Positioning.  Before reading my opinion, stop and think for yourself how these are related. I can come up with 2 ways.  But first we need to review positioning, especially from Pragmatic Marketing’s perspective.  We do positioning so we clearly understand who and why.  Who are we targeting by building a product or creating a marketing message.  Once we know who, then why do they care?  What problems of theirs are we solving? Defining positioning like that almost makes the answer about pricing jump out at us.  We price based on who and on why. First the who.  Different market segments and different personas have different willingness to pay.  If we can be extremely clear about our personas and their market segments it will direct us to learning about how much each persona is willing to pay which of course drives pricing. Next the why.  Once you know why, meaning what problems the persona is trying to solve, willingness to pay becomes easier to figure out.  If we are solving big problems, problems that really matter, then we should be able to charge more.  If we are solving small problems, then not so much. […]
Oct 25, 2015 - Pragmatic Marketing’s Box of the Month is Positioning.  Before reading my opinion, stop and think for yourself how these are related. I can come up with 2 ways.  But first we need to review positioning, especially from Pragmatic Marketing’s perspective.  We do positioning so we clearly understand who and why.  Who are we targeting by building a product or creating a marketing message.  Once we know who, then why do they care?  What problems of theirs are we solving? Defining positioning like that almost makes the answer about pricing jump out at us.  We price based on who and on why. First the who.  Different market segments and different personas have different willingness to pay.  If we can be extremely clear about our personas and their market segments it will direct us to learning about how much each persona is willing to pay which of course drives pricing. Next the why.  Once you know why, meaning what problems the persona is trying to solve, willingness to pay becomes easier to figure out.  If we are solving big problems, problems that really matter, then we should be able to charge more.  If we are solving small problems, then not so much. […]
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Ohio State Learns Pricing … Finally
Nov 02, 2015 - I’m a Buckeye. I graduated from Ohio State. I taught at Ohio State. I wrote an unpublished book on Woody Hayes quotes. I have a bobblehead for every OSU head coach (not Luke Fickel though). My basement was built for watching Buckeye football games.  I’m a Buckeye! And yet, like normal people, I hate it when prices get raised on me. Ohio State raised prices.  In this case, it’s bittersweet. I may have to pay higher prices, but finally my Alma Mater has gotten closer to pricing intelligently. In the past, a football ticket was a football ticket. Every one costs the same. This is insanely stupid. Watch Stubhub.com for prices of tickets of the best games and you’ll see prices of $500 a ticket or more. 10 years ago I spent $600 dollars for two seats to a scalper to watch my team play Michigan State, not even the big rival Michigan. People are willing to pay these prices. Why wasn’t Ohio State capturing any of these dollars? Pricing should be based on willingness to pay. This year in my alumni packet I received the following price list for Ohio State tickets: “Ticket prices (including $6 service charge) for […]
Nov 02, 2015 - I’m a Buckeye. I graduated from Ohio State. I taught at Ohio State. I wrote an unpublished book on Woody Hayes quotes. I have a bobblehead for every OSU head coach (not Luke Fickel though). My basement was built for watching Buckeye football games.  I’m a Buckeye! And yet, like normal people, I hate it when prices get raised on me. Ohio State raised prices.  In this case, it’s bittersweet. I may have to pay higher prices, but finally my Alma Mater has gotten closer to pricing intelligently. In the past, a football ticket was a football ticket. Every one costs the same. This is insanely stupid. Watch Stubhub.com for prices of tickets of the best games and you’ll see prices of $500 a ticket or more. 10 years ago I spent $600 dollars for two seats to a scalper to watch my team play Michigan State, not even the big rival Michigan. People are willing to pay these prices. Why wasn’t Ohio State capturing any of these dollars? Pricing should be based on willingness to pay. This year in my alumni packet I received the following price list for Ohio State tickets: “Ticket prices (including $6 service charge) for […]
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Pricing and Customer Retention
Dec 01, 2015 - Pragmatic Marketing’s box of the month for November is Customer Retention.  This is an activity, or objective, that price can dramatically impact. First, the easy answer for customer retention is don’t raise prices.  Do you remember in 2011 when Netflix raised their prices, dramatically?  In a month they lost 800,000 subscribers.  Think of what happened.  Individual Netflix subscribers were paying their monthly fee, month after month after month.  They weren’t thinking about it.  Then, they get the notice that their fees went up.  At that point each person reevaluated their subscription.  Not only were they upset that the prices went up, they also took the time do think about whether or not they were using the service enough to justify the price. Whenever you raise your prices on a recurring revenue type customer, you almost force them to make the purchase decision again.  Do they really need your product?  Is there another more cost effective provider?  Without the price increase, they just keep writing checks without thinking about it. Sometimes though you really want to raise prices.  How can you do that while minimizing the number of customers who defect from you.  The obvious answer here is you don’t have […]
Dec 01, 2015 - Pragmatic Marketing’s box of the month for November is Customer Retention.  This is an activity, or objective, that price can dramatically impact. First, the easy answer for customer retention is don’t raise prices.  Do you remember in 2011 when Netflix raised their prices, dramatically?  In a month they lost 800,000 subscribers.  Think of what happened.  Individual Netflix subscribers were paying their monthly fee, month after month after month.  They weren’t thinking about it.  Then, they get the notice that their fees went up.  At that point each person reevaluated their subscription.  Not only were they upset that the prices went up, they also took the time do think about whether or not they were using the service enough to justify the price. Whenever you raise your prices on a recurring revenue type customer, you almost force them to make the purchase decision again.  Do they really need your product?  Is there another more cost effective provider?  Without the price increase, they just keep writing checks without thinking about it. Sometimes though you really want to raise prices.  How can you do that while minimizing the number of customers who defect from you.  The obvious answer here is you don’t have […]
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Pricing for International Distribution Channels
Oct 11, 2015 - A student sent in this question: Hi Mark, my name is …, and I took your Pragmatic Pricing course in August of 2014. I have a question about pricing that I was hoping you could help me out with. I currently manage an international sales team and distributor network that we sell our software products through outside of the US. I held an international sales team summit this week with the goal of invigorating some stalled international sales performance. We had a discussion around establishing regional pricing for our distributors. The idea was that there are models for channel selling that set different prices for a specific region based on the value of our products that that region will bear. Do you have any guidance on establishing specialized list pricing for distributors based on any past experience you have? Does it always just simply fall back on value-based pricing – i.e. we should price our products based on the perceived differential value that that our customers IN A SPECIFIC REGION have? Thanks You pretty much have it nailed!  In a region, start by figuring out the end customer price.  Who are your competitors in that market?  They often change based on […]
Oct 11, 2015 - A student sent in this question: Hi Mark, my name is …, and I took your Pragmatic Pricing course in August of 2014. I have a question about pricing that I was hoping you could help me out with. I currently manage an international sales team and distributor network that we sell our software products through outside of the US. I held an international sales team summit this week with the goal of invigorating some stalled international sales performance. We had a discussion around establishing regional pricing for our distributors. The idea was that there are models for channel selling that set different prices for a specific region based on the value of our products that that region will bear. Do you have any guidance on establishing specialized list pricing for distributors based on any past experience you have? Does it always just simply fall back on value-based pricing – i.e. we should price our products based on the perceived differential value that that our customers IN A SPECIFIC REGION have? Thanks You pretty much have it nailed!  In a region, start by figuring out the end customer price.  Who are your competitors in that market?  They often change based on […]
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Tip Included – Smart or Foolish?
Nov 17, 2015 - In New York City some restaurants are going to start bundling in the tip at the end of your meal. In other words, they will raise their prices by some percent and include the tip as part of the price. What predictions do you have? Here are mine. For high end restaurants, including the tip in the price will have no effect on sales, mostly because these buyers are not price sensitive. It’s fun to work in high quality, high priced companies. However, for family restaurants, including the tip will have an impact. The restaurants will work hard to make sure the diners know that tip is included, but will they really remember this when they are choose their restaurant for dinner? Think of the advertising campaign for Southwest of Bags Fly Free. Even though most of us know that Southwest doesn’t charge for luggage, do we really think of that when choosing airlines? Restaurant operations will also be effected. Over time, restaurant owners will stop giving the entire tip to the wait staff. It’s probably going to be split with the kitchen staff, meaning the wait staff will take a pay cut. When this happens the best wait staff […]
Nov 17, 2015 - In New York City some restaurants are going to start bundling in the tip at the end of your meal. In other words, they will raise their prices by some percent and include the tip as part of the price. What predictions do you have? Here are mine. For high end restaurants, including the tip in the price will have no effect on sales, mostly because these buyers are not price sensitive. It’s fun to work in high quality, high priced companies. However, for family restaurants, including the tip will have an impact. The restaurants will work hard to make sure the diners know that tip is included, but will they really remember this when they are choose their restaurant for dinner? Think of the advertising campaign for Southwest of Bags Fly Free. Even though most of us know that Southwest doesn’t charge for luggage, do we really think of that when choosing airlines? Restaurant operations will also be effected. Over time, restaurant owners will stop giving the entire tip to the wait staff. It’s probably going to be split with the kitchen staff, meaning the wait staff will take a pay cut. When this happens the best wait staff […]
Blog Post
A Fun Example of Price Segmentation
Nov 25, 2015 - A reader sent me the following: Hi Mark, Your flexible pricing article on linked-in reminded me of this pricing strategy I encountered in my recent trip to the Philippines. I personally took the attached photo in a public toilet next to a remote area of interest to tourists (Taal Volcano). This is aimed at tourists for sure as 50 peso = 1 USD this is far too high for the average Philippino. However, I did find it amusing as they took care to practice flexible pricing reflecting the value to the customer. Best regards, Wisam Yes, I loved this! Congrats to Wisam for recognizing this as price segmentation. Charge more to people who are willing to pay more. I can’t add anything more. If you see any pricing situation that strikes you as funny, or unfair, or ridiculous, or simply unusual, please send it to me. Feel free to send a picture, an article, an ad, whatever describes the situation. It would be great if you could also include how the pricing made you feel. I’d love to see them all and I’ll share some with my readers (anonymously if you’d like).
Nov 25, 2015 - A reader sent me the following: Hi Mark, Your flexible pricing article on linked-in reminded me of this pricing strategy I encountered in my recent trip to the Philippines. I personally took the attached photo in a public toilet next to a remote area of interest to tourists (Taal Volcano). This is aimed at tourists for sure as 50 peso = 1 USD this is far too high for the average Philippino. However, I did find it amusing as they took care to practice flexible pricing reflecting the value to the customer. Best regards, Wisam Yes, I loved this! Congrats to Wisam for recognizing this as price segmentation. Charge more to people who are willing to pay more. I can’t add anything more. If you see any pricing situation that strikes you as funny, or unfair, or ridiculous, or simply unusual, please send it to me. Feel free to send a picture, an article, an ad, whatever describes the situation. It would be great if you could also include how the pricing made you feel. I’d love to see them all and I’ll share some with my readers (anonymously if you’d like).
Blog Post
Bundling vs. Add-Ons
Dec 15, 2015 - Stewart Rogers (@StewartRogers), a Pragmatic Marketing Certified product manager, tweeted the following question to me: “Question about #pricing: Any opinion or insight on best practice for bundling vs. add-ons #prodmgmt @MarkStiving” This is an insightful question with quite a bit of nuance. Also, without specifics, it is impossible to make a solid recommendation. Here are some things to consider: Add-ons – When we create a new capability for our product and we choose to sell it as an option to one of our other products, we are creating an add-on. One HUGE advantage to add-ons is they are often “Will I?” type products, meaning there is no direct competition for them because they are options to OUR product. This implies we can usually charge more money for add-ons. Another advantage of add-ons is we are really segmenting the market. Those that want the new capability will pay more for it and those that don’t want it won’t pay for it. Sometimes we have customers purchasing our product on a subscription basis and they expect new capabilities built into the quarterly or annual upgrades. Creating the product as an add-on allows us to get more revenue from some of our current customers. Bundling […]
Dec 15, 2015 - Stewart Rogers (@StewartRogers), a Pragmatic Marketing Certified product manager, tweeted the following question to me: “Question about #pricing: Any opinion or insight on best practice for bundling vs. add-ons #prodmgmt @MarkStiving” This is an insightful question with quite a bit of nuance. Also, without specifics, it is impossible to make a solid recommendation. Here are some things to consider: Add-ons – When we create a new capability for our product and we choose to sell it as an option to one of our other products, we are creating an add-on. One HUGE advantage to add-ons is they are often “Will I?” type products, meaning there is no direct competition for them because they are options to OUR product. This implies we can usually charge more money for add-ons. Another advantage of add-ons is we are really segmenting the market. Those that want the new capability will pay more for it and those that don’t want it won’t pay for it. Sometimes we have customers purchasing our product on a subscription basis and they expect new capabilities built into the quarterly or annual upgrades. Creating the product as an add-on allows us to get more revenue from some of our current customers. Bundling […]
Blog Post
Price Segmentation Even at Christmas?
Dec 11, 2015 - Thank you to Ken Forziati for an excellent seasonal example of price segmentation. This is a cut your own tree place, and the first part of price segmentation is they have different prices for different tree types.  Blue Spruce and Concolur Fir (????) were the most expensive at $9 per foot and White Pine was the least expensive at $6.50 per foot.  Presumably that is due to the desirability of the different varietals. Now it gets interesting though.  Think about who would pay the most for a christmas tree.  Someone who is really not price sensitive (rich) probably has a very large house, with very high ceilings.  It only makes sense to charge them more.  They do that by charging more per foot for trees over 9 feet tall.  The upcharge is either $2.50 or $3.00 depending on varietal. Brilliant! Of course, they have an offering for those that are more price sensitive.  Instead of cutting your own tree, you can purchase a tree 6 feet or smaller that has already been cut and presumably is much less expensive.  They don’t get the experience of cutting their own, but they can buy a tree at a low price. If you want […]
Dec 11, 2015 - Thank you to Ken Forziati for an excellent seasonal example of price segmentation. This is a cut your own tree place, and the first part of price segmentation is they have different prices for different tree types.  Blue Spruce and Concolur Fir (????) were the most expensive at $9 per foot and White Pine was the least expensive at $6.50 per foot.  Presumably that is due to the desirability of the different varietals. Now it gets interesting though.  Think about who would pay the most for a christmas tree.  Someone who is really not price sensitive (rich) probably has a very large house, with very high ceilings.  It only makes sense to charge them more.  They do that by charging more per foot for trees over 9 feet tall.  The upcharge is either $2.50 or $3.00 depending on varietal. Brilliant! Of course, they have an offering for those that are more price sensitive.  Instead of cutting your own tree, you can purchase a tree 6 feet or smaller that has already been cut and presumably is much less expensive.  They don’t get the experience of cutting their own, but they can buy a tree at a low price. If you want […]
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Do You Need a Pricing Department?
Sep 21, 2015 - Pricing departments are becoming more common in large companies. Is it any wonder given how powerful pricing is? We’ve all seen the math showing how for a company with 10% gross margin, a 1% improvement in pricing leads to a 10% improvement in profits. That’s huge. Every company should be determining how they find multiple 1%’s. Is a pricing department a good way to find those 1%’s? To really answer that we need to discuss what a pricing department can do well and what it can’t do well. First, people in a pricing department are NOT experts on your products or on your competition. They have no idea how much your customers are willing to pay. Hence, when it comes to actually setting prices they are probably not the right people for the job. Also, pricing people don’t have P&L responsibility, so they should not be the ones making decisions about accepting large strategic deals at deep discounts. That belongs with someone in the product line. Pricing departments are rarely involved in price execution. However, pricing departments should be fantastic at understanding and communicating how to make great pricing decisions. They should be able to monitor and/or audit pricing practices […]
Sep 21, 2015 - Pricing departments are becoming more common in large companies. Is it any wonder given how powerful pricing is? We’ve all seen the math showing how for a company with 10% gross margin, a 1% improvement in pricing leads to a 10% improvement in profits. That’s huge. Every company should be determining how they find multiple 1%’s. Is a pricing department a good way to find those 1%’s? To really answer that we need to discuss what a pricing department can do well and what it can’t do well. First, people in a pricing department are NOT experts on your products or on your competition. They have no idea how much your customers are willing to pay. Hence, when it comes to actually setting prices they are probably not the right people for the job. Also, pricing people don’t have P&L responsibility, so they should not be the ones making decisions about accepting large strategic deals at deep discounts. That belongs with someone in the product line. Pricing departments are rarely involved in price execution. However, pricing departments should be fantastic at understanding and communicating how to make great pricing decisions. They should be able to monitor and/or audit pricing practices […]
Blog Post
Evaluating Harvard Business’s Price Increase Announcement
Sep 30, 2015 - A friend forwarded to me this notification by Harvard Business Publishing announcing an upcoming price increase.  Here is the text of the mailing. “To assist you in planning, we are writing about upcoming changes to the price of HBP course materials, effective July 2016. We know that the cost of course materials affects your institution and is of particular concern to students. For this reason, we increase our prices infrequently and proceed with great care when we do enact a change. “On July 1, 2016, the price of case studies, articles, and book chapters will increase by 7.5%.Because we recognize the high cost of education and are committed to keeping the price of HBP content affordable, we have not raised the price of these materials since 2011. “As a part of this increase we will introduce mechanisms that allow you to manage the cost of HBP materials either at the course level and/or for your institution overall. These options will include customized coursepacks, institutional reporting tools, and payment based on student enrollment. “These options will be available on a trial basis in early 2016, with the opportunity to subscribe to selected services/tools for the 2016-2017 academic year. In January, we will send you […]
Sep 30, 2015 - A friend forwarded to me this notification by Harvard Business Publishing announcing an upcoming price increase.  Here is the text of the mailing. “To assist you in planning, we are writing about upcoming changes to the price of HBP course materials, effective July 2016. We know that the cost of course materials affects your institution and is of particular concern to students. For this reason, we increase our prices infrequently and proceed with great care when we do enact a change. “On July 1, 2016, the price of case studies, articles, and book chapters will increase by 7.5%.Because we recognize the high cost of education and are committed to keeping the price of HBP content affordable, we have not raised the price of these materials since 2011. “As a part of this increase we will introduce mechanisms that allow you to manage the cost of HBP materials either at the course level and/or for your institution overall. These options will include customized coursepacks, institutional reporting tools, and payment based on student enrollment. “These options will be available on a trial basis in early 2016, with the opportunity to subscribe to selected services/tools for the 2016-2017 academic year. In January, we will send you […]
Blog Post
Pricing in Silos – Bundling Across Profit Centers
Sep 08, 2015 - A problem that students in our pricing class often articulate is they can’t bundle products together that are managed by different organizations or divisions.  This is a problem in most big companies and even many smaller companies. Imagine you have profit and loss (P&L) responsibility for product A, which normally sells for $50 with 90% profit margin.  A colleague has P&L responsibility for product B which normally sells for $100 with 20% margin.  You have identified a market segment who needs both A and B, but the market segment is more price sensitive than your normal customers.  What do you do? The easy answer is create a bundle.  Sell both A and B at a discounted bundled price.  For the sake of the example let’s say $120.  This is 20% less than buying both individually.  Turns out there are even more customers from this new market segment than you expected and products are flying off the shelf.  Furthermore, you’re convinced these are people who would not have purchased your products individually.  This is a big incremental win for the company. So far, there’s no problem.  This is exactly what a company should do.  The problem arises when finance does their internal accounting and […]
Sep 08, 2015 - A problem that students in our pricing class often articulate is they can’t bundle products together that are managed by different organizations or divisions.  This is a problem in most big companies and even many smaller companies. Imagine you have profit and loss (P&L) responsibility for product A, which normally sells for $50 with 90% profit margin.  A colleague has P&L responsibility for product B which normally sells for $100 with 20% margin.  You have identified a market segment who needs both A and B, but the market segment is more price sensitive than your normal customers.  What do you do? The easy answer is create a bundle.  Sell both A and B at a discounted bundled price.  For the sake of the example let’s say $120.  This is 20% less than buying both individually.  Turns out there are even more customers from this new market segment than you expected and products are flying off the shelf.  Furthermore, you’re convinced these are people who would not have purchased your products individually.  This is a big incremental win for the company. So far, there’s no problem.  This is exactly what a company should do.  The problem arises when finance does their internal accounting and […]
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Pricing in Channels – Channel Partners Are Customers Too
Aug 21, 2015 - The August box of the month for Pragmatic Marketing is Channel (training and support).  Pricing through a channel is critical to the success of your product and your company. There are many types of channels, but for simplicity in this blog, let’s say a channel partner buys your product at a wholesale price and resells it at a retail price.  Of course there can be multiple channel partners.  For example sometimes distributors sell to resellers.  What we will talk about today applies to every channel partner. As we set our prices, the first price that matters is what to charge the end user.  This end user price must be based on what they are willing to pay.   Manufacturers often don’t get to dictate the end user price, but there are many techniques to influence it and in the end you need to predict what that price will be.  This is not your list price but rather what is often referred to as street price.  The price buyers typically pay. Once you know your street price, next you have to decide the price to your channel partner.  Sometimes you actually set a price, but most of the time you set a […]
Aug 21, 2015 - The August box of the month for Pragmatic Marketing is Channel (training and support).  Pricing through a channel is critical to the success of your product and your company. There are many types of channels, but for simplicity in this blog, let’s say a channel partner buys your product at a wholesale price and resells it at a retail price.  Of course there can be multiple channel partners.  For example sometimes distributors sell to resellers.  What we will talk about today applies to every channel partner. As we set our prices, the first price that matters is what to charge the end user.  This end user price must be based on what they are willing to pay.   Manufacturers often don’t get to dictate the end user price, but there are many techniques to influence it and in the end you need to predict what that price will be.  This is not your list price but rather what is often referred to as street price.  The price buyers typically pay. Once you know your street price, next you have to decide the price to your channel partner.  Sometimes you actually set a price, but most of the time you set a […]
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A Reader Question – Pricing for Altruism vs. Profit.
Aug 18, 2015 - An email from a reader: Hi Mark! Challenger Health (info@challengerhealth.com) is a very early stage, non-medicinal consumer healthcare products startup; our core customers are physicians (Orthopaedic primarily) and physical therapy professionals. The most effective pricing model is something we have discussed at length, more specifically, if it makes sense strategically to price our products differently depending on whether the customer (doctor, in most cases) intends to resell to his/her patients or provide the products at no cost, wherein the former is charged more than the latter. Thanks for your time Mark, Patrick Grams Thank you for the question Patrick.  Although it’s hard for me to give you a definitive answer, I’m leaning heavily toward YES! you should charge different prices based on how the doctors will use your product. The most important rule for setting prices is charge what your customers are willing to pay.  It seems very likely to me that those who are making profit are willing to pay more than those who are giving it away.  Doctors who give it away are absorbing the cost themselves.  Those who are reselling it are passing those costs, plus a profit, on to their customers. As to how to do […]
Aug 18, 2015 - An email from a reader: Hi Mark! Challenger Health (info@challengerhealth.com) is a very early stage, non-medicinal consumer healthcare products startup; our core customers are physicians (Orthopaedic primarily) and physical therapy professionals. The most effective pricing model is something we have discussed at length, more specifically, if it makes sense strategically to price our products differently depending on whether the customer (doctor, in most cases) intends to resell to his/her patients or provide the products at no cost, wherein the former is charged more than the latter. Thanks for your time Mark, Patrick Grams Thank you for the question Patrick.  Although it’s hard for me to give you a definitive answer, I’m leaning heavily toward YES! you should charge different prices based on how the doctors will use your product. The most important rule for setting prices is charge what your customers are willing to pay.  It seems very likely to me that those who are making profit are willing to pay more than those who are giving it away.  Doctors who give it away are absorbing the cost themselves.  Those who are reselling it are passing those costs, plus a profit, on to their customers. As to how to do […]
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Pricing Crossfit for Visitors
Jul 28, 2015 - Here is a fun pricing situation shared with us from a colleague. I do CrossFit for exercise and often drop in to CrossFit gyms (boxes they are called) when I travel. It’s a common practice in the CF community. Some boxes charge $0 for drop ins (but expect you to buy something like a logo t-shirt). Some charge something, up to $30. It’s understandable they would charge something to cover their costs. The box I go to when in Boston is in the building next to the building where I work. It was recently bought out by a large operation and they have instituted a new drop in fee schedule. If you drop in it’s $30/visit. But if you get a t-shirt it’s $25/visit. Wait. Normally you pay extra for a t-shirt. I spoke to the GM and he explained they are trying to build a following and get the word out. So they decided to give the t-shirt away and charge less. It’s a no-brainer. I have two new t-shirts. LOL. —D Thanks D for the description of this unusual pricing situation.  These details give us an opportunity to talk about two pricing lessons. First, although costs don’t drive […]
Jul 28, 2015 - Here is a fun pricing situation shared with us from a colleague. I do CrossFit for exercise and often drop in to CrossFit gyms (boxes they are called) when I travel. It’s a common practice in the CF community. Some boxes charge $0 for drop ins (but expect you to buy something like a logo t-shirt). Some charge something, up to $30. It’s understandable they would charge something to cover their costs. The box I go to when in Boston is in the building next to the building where I work. It was recently bought out by a large operation and they have instituted a new drop in fee schedule. If you drop in it’s $30/visit. But if you get a t-shirt it’s $25/visit. Wait. Normally you pay extra for a t-shirt. I spoke to the GM and he explained they are trying to build a following and get the word out. So they decided to give the t-shirt away and charge less. It’s a no-brainer. I have two new t-shirts. LOL. —D Thanks D for the description of this unusual pricing situation.  These details give us an opportunity to talk about two pricing lessons. First, although costs don’t drive […]
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Minimum Wage and Prices
Apr 08, 2015 - There is a lot of talk about raising minimum wage.  Of course this is a tough political issue with one side claiming it will cost jobs and the other side claiming people can’t live on $7.25 an hour.  This blog is about neither of those things.  This blog is about what will happen to prices. The short answer is, prices will go up as minimum wage goes up.  Many of you loyal readers know that costs don’t drive pricing, so you may be wondering why increasing minimum wage (a cost) increases prices? First, some numbers and some math.  And to keep it easy, let’s focus on McDonald’s.  According to Market Realist, 24.6% of McDonald’s revenue is taken up by their labor costs.  (Most restaurants run between 25 and 40%).  Even with these low labor costs, McDonald’s only makes 3.6% profit. Throughout the blog we will assume that labor rates will double with the new minimum wage.  Unions are asking McD’s to go from $7.25 to $15 minimum, more than double.  Of course, not everyone at McD’s is only making minimum wage, but to be consistent, let’s just assume overall labor costs double.  The same story will hold true if labor costs only go […]
Apr 08, 2015 - There is a lot of talk about raising minimum wage.  Of course this is a tough political issue with one side claiming it will cost jobs and the other side claiming people can’t live on $7.25 an hour.  This blog is about neither of those things.  This blog is about what will happen to prices. The short answer is, prices will go up as minimum wage goes up.  Many of you loyal readers know that costs don’t drive pricing, so you may be wondering why increasing minimum wage (a cost) increases prices? First, some numbers and some math.  And to keep it easy, let’s focus on McDonald’s.  According to Market Realist, 24.6% of McDonald’s revenue is taken up by their labor costs.  (Most restaurants run between 25 and 40%).  Even with these low labor costs, McDonald’s only makes 3.6% profit. Throughout the blog we will assume that labor rates will double with the new minimum wage.  Unions are asking McD’s to go from $7.25 to $15 minimum, more than double.  Of course, not everyone at McD’s is only making minimum wage, but to be consistent, let’s just assume overall labor costs double.  The same story will hold true if labor costs only go […]
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Good, Better, Best and OK? Will 4 levels work?
Apr 21, 2015 -   Here is a question from a reader: Hey Mark, We currently do have good, better, best plans for one of our services. And it is good, better, best – I know you’ve mentioned in your posts (iPhone, for example) that people sometimes don’t do it right. In our case, each plan does include everything previous plan includes plus few more things. Here’s my question, does it always have to be 3? Reason I ask, one of our clients suggested to offer more introductory offer that’s lower in price than our current good option, which would help us pick up clients that are having hard time paying good price but might upgrade later once they increase their business. We offer B2B services, so the lower priced plan would be for solopreneurs and one-person businesses getting started. The difference would be $59/mo vs $29/mo or $39/mo, with limited core services. I don’t want to lower $59, because it does pack quiet a bit. But picking up very price sensitive clients does go with our overall strategy of helping SMBs grow. Would love to hear your thoughts on this. Thanks a lot for your insight, feel free to use this for a […]
Apr 21, 2015 -   Here is a question from a reader: Hey Mark, We currently do have good, better, best plans for one of our services. And it is good, better, best – I know you’ve mentioned in your posts (iPhone, for example) that people sometimes don’t do it right. In our case, each plan does include everything previous plan includes plus few more things. Here’s my question, does it always have to be 3? Reason I ask, one of our clients suggested to offer more introductory offer that’s lower in price than our current good option, which would help us pick up clients that are having hard time paying good price but might upgrade later once they increase their business. We offer B2B services, so the lower priced plan would be for solopreneurs and one-person businesses getting started. The difference would be $59/mo vs $29/mo or $39/mo, with limited core services. I don’t want to lower $59, because it does pack quiet a bit. But picking up very price sensitive clients does go with our overall strategy of helping SMBs grow. Would love to hear your thoughts on this. Thanks a lot for your insight, feel free to use this for a […]
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Pricing and Lead Generation
Apr 28, 2015 - Pragmatic Marketing’s activity of the month is lead generation. Before you read any farther, think about what these two have in common. How can pricing help with lead generation? I had to think hard to figure out how pricing can help or is even related. Here are a few thoughts. Please share yours in the comments. Lead generation is the moment in the buying process where the buyer reaches out to us. Let’s us know they may be interested in what we have. If they see our price early and it’s way too high (or way too low), we will never get the lead. So we need to have reasonable pricing. The absence or presence of pricing information can effect lead generation. Unless you have a complex direct sales process, I almost alway lean towards showing your prices. Think about your own behavior. You’re thinking about buying some new gadget. You go online, find the website, read a lot, and then you go to look for the price. It’s not there. Do you call? Do you give them your email address so they can reach out to you? Probably not. You probably move on to another hopefully similar product. No […]
Apr 28, 2015 - Pragmatic Marketing’s activity of the month is lead generation. Before you read any farther, think about what these two have in common. How can pricing help with lead generation? I had to think hard to figure out how pricing can help or is even related. Here are a few thoughts. Please share yours in the comments. Lead generation is the moment in the buying process where the buyer reaches out to us. Let’s us know they may be interested in what we have. If they see our price early and it’s way too high (or way too low), we will never get the lead. So we need to have reasonable pricing. The absence or presence of pricing information can effect lead generation. Unless you have a complex direct sales process, I almost alway lean towards showing your prices. Think about your own behavior. You’re thinking about buying some new gadget. You go online, find the website, read a lot, and then you go to look for the price. It’s not there. Do you call? Do you give them your email address so they can reach out to you? Probably not. You probably move on to another hopefully similar product. No […]
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Pricing and Distinctive Competencies
May 12, 2015 -   This month’s activity of the week is Distinctive Competency. This has a direct relationship with pricing. A distinctive competence is a distinct core competence. In other words, it’s something you are very good and your competition isn’t. When your products take advantage of your distinctive competencies, then by definition your product are differentiated. Your products have your distinctive competencies. Your competitors don’t. When pricing products that have competition, you start with your competitors price and then add the value of your positive differentiation and subtract the value of your competitors advantages. Your distinctive competence is one of your positive differentiators, as long as your market values it. If your distinctive competence is so strong that it essentially makes you a monopoly in your market (i.e. your buyers only consider your products and don’t even consider any competitive products) then that directly impacts your pricing. You have created market conditions and products with no competition. In these type markets, buyers are relatively price insensitive, meaning we can often charge higher prices and barely lose any business. Distinctive competencies are inherent competitive advantages. Create products that take advantage of your distinctive competencies and you are creating products you can charge more […]
May 12, 2015 -   This month’s activity of the week is Distinctive Competency. This has a direct relationship with pricing. A distinctive competence is a distinct core competence. In other words, it’s something you are very good and your competition isn’t. When your products take advantage of your distinctive competencies, then by definition your product are differentiated. Your products have your distinctive competencies. Your competitors don’t. When pricing products that have competition, you start with your competitors price and then add the value of your positive differentiation and subtract the value of your competitors advantages. Your distinctive competence is one of your positive differentiators, as long as your market values it. If your distinctive competence is so strong that it essentially makes you a monopoly in your market (i.e. your buyers only consider your products and don’t even consider any competitive products) then that directly impacts your pricing. You have created market conditions and products with no competition. In these type markets, buyers are relatively price insensitive, meaning we can often charge higher prices and barely lose any business. Distinctive competencies are inherent competitive advantages. Create products that take advantage of your distinctive competencies and you are creating products you can charge more […]
Blog Post
Is Slack Rewriting SaaS Pricing Rules?
May 18, 2015 - Steven Forth, a fellow pricing expert that I enjoy reading, shared and interpreted an awesome story about a new pricing strategy for Saas in a blog titled Slack Is Rewriting The Rulebook on Saas Pricing.  The key point of the story is that Steven was elated when he received an email from Slack saying Steven’s company didn’t use all that they purchased so there would be a credit provided to them.  Wow. First, imagine the elation whenever any company surprises you by giving you money you didn’t expect.  That is incredible. In Steven’s article, he went on to describe the history of software pricing models.  A very good article you should read.  The only minor disagreement I have with his article is he stated that he believes this pricing tactic is a transition to pricing based on value delivered.  In other words, this is the future of SaaS pricing. I’ve made many wrong predictions in this blog, and this may be another, but here is my prediction for the success of this new pricing tactic. It depends. In some markets this will drive competitiveness.  In others, it is simply giving money back to your customer at the cost of your […]
May 18, 2015 - Steven Forth, a fellow pricing expert that I enjoy reading, shared and interpreted an awesome story about a new pricing strategy for Saas in a blog titled Slack Is Rewriting The Rulebook on Saas Pricing.  The key point of the story is that Steven was elated when he received an email from Slack saying Steven’s company didn’t use all that they purchased so there would be a credit provided to them.  Wow. First, imagine the elation whenever any company surprises you by giving you money you didn’t expect.  That is incredible. In Steven’s article, he went on to describe the history of software pricing models.  A very good article you should read.  The only minor disagreement I have with his article is he stated that he believes this pricing tactic is a transition to pricing based on value delivered.  In other words, this is the future of SaaS pricing. I’ve made many wrong predictions in this blog, and this may be another, but here is my prediction for the success of this new pricing tactic. It depends. In some markets this will drive competitiveness.  In others, it is simply giving money back to your customer at the cost of your […]
Blog Post
How to Price Golf … Dynamically
May 26, 2015 - Every once in a while, a company in a traditional industry uses a new pricing model.  Troon North Golf is one of these companies. Typically when you go to a golf course, there is a flat fee.  Sometimes their weekend price is more than their weekday price, but that’s about as far as it goes.  Troon has taken price segmentation to the next level. If you check out their website, you’ll find they put different prices based on the time of day.  They are in Arizona, so the morning tee times are more expensive than mid day.  But in truth, it’s based on demand.  More people want to play in the morning in Arizona.  It’s worth more. Play around with their site and you’ll find that different days have different prices.  My favorite though is that as a tee time approaches and hasn’t yet been booked, the price goes down. If they are using demand to drive pricing, which I believe they are, then they also probably change prices based on weather.  I’ll bet on cool days in Scottsdale (are there any?) the prices are higher in the afternoon.  Do they use the weather forecast to drive their pricing?  If I […]
May 26, 2015 - Every once in a while, a company in a traditional industry uses a new pricing model.  Troon North Golf is one of these companies. Typically when you go to a golf course, there is a flat fee.  Sometimes their weekend price is more than their weekday price, but that’s about as far as it goes.  Troon has taken price segmentation to the next level. If you check out their website, you’ll find they put different prices based on the time of day.  They are in Arizona, so the morning tee times are more expensive than mid day.  But in truth, it’s based on demand.  More people want to play in the morning in Arizona.  It’s worth more. Play around with their site and you’ll find that different days have different prices.  My favorite though is that as a tee time approaches and hasn’t yet been booked, the price goes down. If they are using demand to drive pricing, which I believe they are, then they also probably change prices based on weather.  I’ll bet on cool days in Scottsdale (are there any?) the prices are higher in the afternoon.  Do they use the weather forecast to drive their pricing?  If I […]
Blog Post
The Biggest Impediment to Price Segmentation
Jun 08, 2015 - This blog frequently emphasizes the importance of charging different prices to different customers based on their willingness to pay.  However, it has never acknowledged the challenges to implementing this as a strategy.  Recently, I’ve run into several companies who can’t implement this extremely profitable strategy for one HUGE reason.  Their systems don’t enable it. If you know a company in one industry will pay more than a company in another industry, do you have the ability to quote different prices to these two companies?  Then, if you get an order from both of them, can you invoice different customers the correct pricing?  These are the two biggest sticking points. Quoting Companies who mostly use a direct salesforce usually don’t have a problem with this.  The salespeople negotiate prices (i.e. discounts) with each customer.  The types of companies that can justify direct sales forces typically sell large deals to other businesses. Companies (or the portions of companies) without a direct salesforce need a systematic method to quote different customers different prices.  SaaS and eCommerce companies often publish their prices on their websites.  Yet many of these companies still find ways to segment their pricing.  Sometimes they segment by geography, some offer […]
Jun 08, 2015 - This blog frequently emphasizes the importance of charging different prices to different customers based on their willingness to pay.  However, it has never acknowledged the challenges to implementing this as a strategy.  Recently, I’ve run into several companies who can’t implement this extremely profitable strategy for one HUGE reason.  Their systems don’t enable it. If you know a company in one industry will pay more than a company in another industry, do you have the ability to quote different prices to these two companies?  Then, if you get an order from both of them, can you invoice different customers the correct pricing?  These are the two biggest sticking points. Quoting Companies who mostly use a direct salesforce usually don’t have a problem with this.  The salespeople negotiate prices (i.e. discounts) with each customer.  The types of companies that can justify direct sales forces typically sell large deals to other businesses. Companies (or the portions of companies) without a direct salesforce need a systematic method to quote different customers different prices.  SaaS and eCommerce companies often publish their prices on their websites.  Yet many of these companies still find ways to segment their pricing.  Sometimes they segment by geography, some offer […]
Blog Post
Price Segmentation: Ice Cream in Venice
Jul 07, 2015 - You can learn pricing lessons from many places.  A couple weeks ago my wife and I started an Italian trip in Venice.  After walking around the fascinating sidewalks and alleys most of the day we decided to stop for some gelato.  Most gelato shops are set up only for take away service.  However, we found one gelato shop that had tables out front.  Our tired feet could use the rest. Imagine my surprise when I saw the sign “Prices of Ice-Creams at the table are different.”  At first I was surprised because I had to pay more to sit at a table.  Then I was pleased because I ran into an unexpected pricing strategy.  Awesome!  Let’s talk about it. First, this is a great price segmentation technique.  Sitting at a table is more valuable to some buyers.  Maybe their feet are tired.  Maybe they want a relaxing conversation with friends.  Regardless, some people are willing to pay more to sit, so the gelato shop charges for it. Second, notice the sign is in English.  We were in Italy.  This says to me that Italians didn’t really need the sign.  This is accepted practice in Italy.  We confirmed this as we ran into […]
Jul 07, 2015 - You can learn pricing lessons from many places.  A couple weeks ago my wife and I started an Italian trip in Venice.  After walking around the fascinating sidewalks and alleys most of the day we decided to stop for some gelato.  Most gelato shops are set up only for take away service.  However, we found one gelato shop that had tables out front.  Our tired feet could use the rest. Imagine my surprise when I saw the sign “Prices of Ice-Creams at the table are different.”  At first I was surprised because I had to pay more to sit at a table.  Then I was pleased because I ran into an unexpected pricing strategy.  Awesome!  Let’s talk about it. First, this is a great price segmentation technique.  Sitting at a table is more valuable to some buyers.  Maybe their feet are tired.  Maybe they want a relaxing conversation with friends.  Regardless, some people are willing to pay more to sit, so the gelato shop charges for it. Second, notice the sign is in English.  We were in Italy.  This says to me that Italians didn’t really need the sign.  This is accepted practice in Italy.  We confirmed this as we ran into […]
Blog Post
The Second Biggest Impediment to Price Segmentation – Data
Jul 15, 2015 - A few weeks ago Pragmatic Pricing talked about having the quoting and invoicing systems necessary to execute price segmentation strategies.  Another fundamental capability you need is systematically collecting the right data.  In this era of “big data” this shouldn’t come as a surprise, but unless someone has consciously sat down to determine what data to collect, it’s very difficult to use this information for price segmentation. Each of the four techniques for price segmentation requires a different set of data. Customer characteristics – In order to charge different customers different prices, you need to know the customer types.  This information is best collected in whatever sales automation tool you are using and stored with your customer master.  The types of data you want to collect are things like region (geography), size of company, industry(ies) they serve, and type (commercial, government, non-profit, educational).  This is certainly not an exhaustive list.  You want to gather data for any characteristics of your customers that you think may indicate their willingness to pay. Transaction characteristics – We can charge different customers different prices based on what we know at the time of the transaction.  Of course we can only do this and analyze it if […]
Jul 15, 2015 - A few weeks ago Pragmatic Pricing talked about having the quoting and invoicing systems necessary to execute price segmentation strategies.  Another fundamental capability you need is systematically collecting the right data.  In this era of “big data” this shouldn’t come as a surprise, but unless someone has consciously sat down to determine what data to collect, it’s very difficult to use this information for price segmentation. Each of the four techniques for price segmentation requires a different set of data. Customer characteristics – In order to charge different customers different prices, you need to know the customer types.  This information is best collected in whatever sales automation tool you are using and stored with your customer master.  The types of data you want to collect are things like region (geography), size of company, industry(ies) they serve, and type (commercial, government, non-profit, educational).  This is certainly not an exhaustive list.  You want to gather data for any characteristics of your customers that you think may indicate their willingness to pay. Transaction characteristics – We can charge different customers different prices based on what we know at the time of the transaction.  Of course we can only do this and analyze it if […]
Blog Post
Pricing and Demos?
Jul 20, 2015 - Pragmatic Marketing’s box of the month for July is Demo’s. How can that possibly relate to pricing?  After thinking hard, I came up with one direct relationship and several ways they are similar. First the direct relationship.  Obviously, the better the demo, the more your customer is willing to pay, the more you can charge.  This just makes sense and happens to be true with everything that is in the value creation category.  The more value you create in your buyer’s mind, the more you can charge.  Lesson: learn to give great demos to maximize the price you can achieve. Now, for the similarities – Timing – You must be careful with your timing on both when you give a demo and when you deliver pricing.  Bad timing on either and you can lose the deal altogether.  You want to give your demo AFTER you have created rapport with the buyers.  Something typically goes awry during a demo, or we show them the ugly admin screen.  Having rapport will help you overcome these mishaps.  You want to deliver pricing AFTER you have built up value in the buyer’s mind.  If you give it too soon, you could lose the deal because […]
Jul 20, 2015 - Pragmatic Marketing’s box of the month for July is Demo’s. How can that possibly relate to pricing?  After thinking hard, I came up with one direct relationship and several ways they are similar. First the direct relationship.  Obviously, the better the demo, the more your customer is willing to pay, the more you can charge.  This just makes sense and happens to be true with everything that is in the value creation category.  The more value you create in your buyer’s mind, the more you can charge.  Lesson: learn to give great demos to maximize the price you can achieve. Now, for the similarities – Timing – You must be careful with your timing on both when you give a demo and when you deliver pricing.  Bad timing on either and you can lose the deal altogether.  You want to give your demo AFTER you have created rapport with the buyers.  Something typically goes awry during a demo, or we show them the ugly admin screen.  Having rapport will help you overcome these mishaps.  You want to deliver pricing AFTER you have built up value in the buyer’s mind.  If you give it too soon, you could lose the deal because […]
Blog Post
Who Prices? The Survey Says …
Mar 02, 2015 - Tweet Annually, Pragmatic Marketing surveys the market and this year, I was allowed to study the data. The data I used was from the 842 respondents who completed the survey.  Since Pragmatic Marketing targets product teams, you can consider that’s the population from which this data is drawn. In the analysis below, the dependent variable […]
Mar 02, 2015 - Tweet Annually, Pragmatic Marketing surveys the market and this year, I was allowed to study the data. The data I used was from the 842 respondents who completed the survey.  Since Pragmatic Marketing targets product teams, you can consider that’s the population from which this data is drawn. In the analysis below, the dependent variable […]
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Fascinating Proof that Price Is an Indicator of Quality
Feb 02, 2015 - Tweet The 60-Second Mind podcast put out by Scientific American on January 31 brought us fascinating proof that price is an indicator of quality, proof that we believe this deep down in our bodies. They described a study from the journal Neurology. [Alberto J. Espay et al, Placebo effect of medication cost in Parkinson disease: […]
Feb 02, 2015 - Tweet The 60-Second Mind podcast put out by Scientific American on January 31 brought us fascinating proof that price is an indicator of quality, proof that we believe this deep down in our bodies. They described a study from the journal Neurology. [Alberto J. Espay et al, Placebo effect of medication cost in Parkinson disease: […]
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Good, Better, Best – Do It Right!
Jan 14, 2015 - Tweet It is a great feeling when readers tell me they’ve implemented good, better, best because of what they’ve read. (Actually it’s a great feeling that people read the blog, let alone take action.) Then, when they went on to describe what they had done, it became obvious I left out an important detail. Several […]
Jan 14, 2015 - Tweet It is a great feeling when readers tell me they’ve implemented good, better, best because of what they’ve read. (Actually it’s a great feeling that people read the blog, let alone take action.) Then, when they went on to describe what they had done, it became obvious I left out an important detail. Several […]
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Pricing Market Problems
Jan 21, 2015 - Tweet The Pragmatic Marketing framework activity of the month is Market Problems. If you know about Pragmatic Marketing you know that the foundation of all that we teach is understanding and then solving market problems. At first glance, it appears that pricing is directly related to the size of the problem solved. Some life or […]
Jan 21, 2015 - Tweet The Pragmatic Marketing framework activity of the month is Market Problems. If you know about Pragmatic Marketing you know that the foundation of all that we teach is understanding and then solving market problems. At first glance, it appears that pricing is directly related to the size of the problem solved. Some life or […]
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Interesting Pricing Scenario
Jan 27, 2015 - Tweet A student wrote in to ask the following question.  It was fascinating enough I want to share it with you.  All identities and industries are modified to protect the privacy of the actual situation.  Here’s the question: Hi Mark, I’m wondering if you can assist me with something I’m struggling with. I’m working on […]
Jan 27, 2015 - Tweet A student wrote in to ask the following question.  It was fascinating enough I want to share it with you.  All identities and industries are modified to protect the privacy of the actual situation.  Here’s the question: Hi Mark, I’m wondering if you can assist me with something I’m struggling with. I’m working on […]
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Can Airline Seats Get Smaller? A Pricing Perspective
Jan 07, 2015 - Tweet I can’t believe how tight airplane seats are. They keep on reducing our legroom. It’s ridiculous how small these things are now. And I’m not the only one. Everyone complains about the lack of legroom. However, believe it or not, we ask for less legroom. Not directly, but with our choices. When people choose […]
Jan 07, 2015 - Tweet I can’t believe how tight airplane seats are. They keep on reducing our legroom. It’s ridiculous how small these things are now. And I’m not the only one. Everyone complains about the lack of legroom. However, believe it or not, we ask for less legroom. Not directly, but with our choices. When people choose […]
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Trade Show Pricing – Deep Discounts to Buy Now!
Dec 17, 2014 - Tweet In class the other day, a student asked why we see companies offering big discounts at trade shows. It happens not only at trade shows. We often see great deals if we’re willing to make an immediate decision. Go see a professional speaker and at the end of the talk he or she will […]
Dec 17, 2014 - Tweet In class the other day, a student asked why we see companies offering big discounts at trade shows. It happens not only at trade shows. We often see great deals if we’re willing to make an immediate decision. Go see a professional speaker and at the end of the talk he or she will […]
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Seth Godin on Will I? and Which one?
Dec 24, 2014 - Tweet Seth’s blog is the only one I read every day.  He talks about a variety of topics, always with insight.  His short blog this morning, although not directly about pricing, is almost identical to the concept of Will I? and Which one?  Here is the entirety of Seth’s short blog: This or that vs. yes or […]
Dec 24, 2014 - Tweet Seth’s blog is the only one I read every day.  He talks about a variety of topics, always with insight.  His short blog this morning, although not directly about pricing, is almost identical to the concept of Will I? and Which one?  Here is the entirety of Seth’s short blog: This or that vs. yes or […]
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Referrals, References and Pricing
Dec 01, 2014 - Tweet   Pragmatic Marketing’s December activity/box of the month is Referrals and References. What does this have to do with pricing? Plenty. If you are systematically executing the activity of creating and collecting referrals and references, then you probably have a formalized program on turning customers into valuable marketing tools. If you don’t then you […]
Dec 01, 2014 - Tweet   Pragmatic Marketing’s December activity/box of the month is Referrals and References. What does this have to do with pricing? Plenty. If you are systematically executing the activity of creating and collecting referrals and references, then you probably have a formalized program on turning customers into valuable marketing tools. If you don’t then you […]
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Pricing Product Portfolios – Creating Value
Nov 26, 2014 - Tweet Pragmatic Marketing’s activity/box of the month is Product Portfolio. Combine this with pricing and you have a gold mine of great content ideas. The most important concept at the intersection of these two topics is this: Knowing how to price product portfolios helps you CREATE much more profitable product portfolios. You see, pricing a portfolio […]
Nov 26, 2014 - Tweet Pragmatic Marketing’s activity/box of the month is Product Portfolio. Combine this with pricing and you have a gold mine of great content ideas. The most important concept at the intersection of these two topics is this: Knowing how to price product portfolios helps you CREATE much more profitable product portfolios. You see, pricing a portfolio […]
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Sales and Buying Process – A Love Story – Except for Pricing
Feb 24, 2015 - Tweet Isn’t it great being in a relationship? I’ve been married over 25 years and still love spending time with my wife. We entertain each other. We help each other. We console each other. We advise each other. We stretch each other. We root for each other. We trust each other. We have common goals. […]
Feb 24, 2015 - Tweet Isn’t it great being in a relationship? I’ve been married over 25 years and still love spending time with my wife. We entertain each other. We help each other. We console each other. We advise each other. We stretch each other. We root for each other. We trust each other. We have common goals. […]
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Walmart Price Matching Amazon? Look at Segments
Nov 18, 2014 - Tweet This article in the International Business Times reports that Walmart may match lower prices from on line retailers. Walmart already price matches other retailers, but so far has not ventured so deep to match prices with Amazon. Is this a wise decision or not? First, the key reason companies should offer price matching is […]
Nov 18, 2014 - Tweet This article in the International Business Times reports that Walmart may match lower prices from on line retailers. Walmart already price matches other retailers, but so far has not ventured so deep to match prices with Amazon. Is this a wise decision or not? First, the key reason companies should offer price matching is […]
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Personas and Pricing
Oct 29, 2014 - Tweet Pragmatic Marketing’s October highlighted activity is personas.  So how does this relate to pricing?  In many ways, but let’s split this topic in two’s, buyer and user personas.  Recall that in general, we build products to solve problems for user personas and we market our products to buyer personas.   But before we start […]
Oct 29, 2014 - Tweet Pragmatic Marketing’s October highlighted activity is personas.  So how does this relate to pricing?  In many ways, but let’s split this topic in two’s, buyer and user personas.  Recall that in general, we build products to solve problems for user personas and we market our products to buyer personas.   But before we start […]
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How Pricing Can Be Used in Sales Compensation
Oct 13, 2014 - Tweet A frequent question during our Price class is “How should we compensate our sales force?” Salespeople have a huge influence on our achieved margin.  They are the front line in any negotiations.  They are the ones who communicate our value to the customer.  They set the customer expectations on what price they should be paying. […]
Oct 13, 2014 - Tweet A frequent question during our Price class is “How should we compensate our sales force?” Salespeople have a huge influence on our achieved margin.  They are the front line in any negotiations.  They are the ones who communicate our value to the customer.  They set the customer expectations on what price they should be paying. […]
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How You Can Use “Pay per Laugh”
Oct 20, 2014 - Tweet A friend and fellow pricing expert, Jon Manning, posted this article, “Comedy club charges customers per laugh” in the Pricing Propheteers LinkedIn group. If you click on the link and scroll to the bottom of the article, you’ll see a video that describes it well. To summarize, they hooked up cameras to the seat […]
Oct 20, 2014 - Tweet A friend and fellow pricing expert, Jon Manning, posted this article, “Comedy club charges customers per laugh” in the Pricing Propheteers LinkedIn group. If you click on the link and scroll to the bottom of the article, you’ll see a video that describes it well. To summarize, they hooked up cameras to the seat […]
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Pricing at the Palms Resort
Oct 06, 2014 - Tweet Last week I attended the Train the Trainer class put on by Ed Tate and Darren LaCroix of the World Champions Edge. Great class. There is always something new to learn, but that’s not the point of this blog. They had arranged a special rate of only $49 a night for a room at the […]
Oct 06, 2014 - Tweet Last week I attended the Train the Trainer class put on by Ed Tate and Darren LaCroix of the World Champions Edge. Great class. There is always something new to learn, but that’s not the point of this blog. They had arranged a special rate of only $49 a night for a room at the […]
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Pricing and the Competitive Landscape
Sep 30, 2014 - Tweet Usually when we use the phrase “the competitive landscape” we are looking to enter a market and trying to decide how it looks. Is this a market where we want to play or not? Pricing offers a unique perspective on this question. First, remember that costs are essentially irrelevant to pricing. What really matters […]
Sep 30, 2014 - Tweet Usually when we use the phrase “the competitive landscape” we are looking to enter a market and trying to decide how it looks. Is this a market where we want to play or not? Pricing offers a unique perspective on this question. First, remember that costs are essentially irrelevant to pricing. What really matters […]
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San Jose Sharks Use Price Label to Add Value
Sep 22, 2014 - Tweet A Sharks season ticket holder wrote: I was surprised to learn that the SJ Sharks are printing variable pricing on the tickets for the games. “This means that the price printed on your ticket will reflect the true market value based on the expected demand for each game.” http://sharks.nhl.com/club/page.htm?id=100047 So if you are in […]
Sep 22, 2014 - Tweet A Sharks season ticket holder wrote: I was surprised to learn that the SJ Sharks are printing variable pricing on the tickets for the games. “This means that the price printed on your ticket will reflect the true market value based on the expected demand for each game.” http://sharks.nhl.com/club/page.htm?id=100047 So if you are in […]
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Pricing Across Regions
Sep 16, 2014 - Tweet The following question was asked on the LinkedIn group Pragmatic Marketing Alumni.  FYI, Rhoda, who asked the question, works for a large company that sells information products. Global Pricing – Fact or Friction No. It isn’t a typo. I really mean friction. Lately I’ve been thinking a great deal about how readily we do […]
Sep 16, 2014 - Tweet The following question was asked on the LinkedIn group Pragmatic Marketing Alumni.  FYI, Rhoda, who asked the question, works for a large company that sells information products. Global Pricing – Fact or Friction No. It isn’t a typo. I really mean friction. Lately I’ve been thinking a great deal about how readily we do […]
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The Role of Pricing Departments
Sep 08, 2014 - Tweet Most people don’t know pricing, and most people don’t know they don’t know pricing. More and more companies are building pricing departments in recognition of these two “facts”. I’ve seen several different ways of organizing pricing, but one seems to stand out, especially for large corporations. These effective pricing departments essentially act as internal […]
Sep 08, 2014 - Tweet Most people don’t know pricing, and most people don’t know they don’t know pricing. More and more companies are building pricing departments in recognition of these two “facts”. I’ve seen several different ways of organizing pricing, but one seems to stand out, especially for large corporations. These effective pricing departments essentially act as internal […]
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What to Price for in Software
Sep 03, 2014 - Tweet For hardware products, we typically charge per unit.  When you make hamburgers, you charge for the number of hamburgers people want to buy.  (Of course it is more complex, but that’s for later.)  This is typical  because your costs of manufacturing are directly proportional to the number of units purchased and … buyers assume […]
Sep 03, 2014 - Tweet For hardware products, we typically charge per unit.  When you make hamburgers, you charge for the number of hamburgers people want to buy.  (Of course it is more complex, but that’s for later.)  This is typical  because your costs of manufacturing are directly proportional to the number of units purchased and … buyers assume […]
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Please Don’t Let Your CEO Negotiate Price
Aug 26, 2014 - Tweet You’re on the edge of closing a huge deal. Your salespeople have done a great job of selling value. They have convinced the buyers and the users that yours is the right solution for their company. All is on track. Then, of course, purchasing gets involved to get a better deal and mostly a […]
Aug 26, 2014 - Tweet You’re on the edge of closing a huge deal. Your salespeople have done a great job of selling value. They have convinced the buyers and the users that yours is the right solution for their company. All is on track. Then, of course, purchasing gets involved to get a better deal and mostly a […]
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Is My $20 Book Worth $236?
Aug 12, 2014 - Tweet Last week, the least expensive paperback version of my book on Amazon was $236 even though the cover price is $20. Wow. The Kindle version was reasonably priced at $9.99. But $236? And it wasn’t just one company. There were multiple vendors offering my book in that price range. What happened? You may or […]
Aug 12, 2014 - Tweet Last week, the least expensive paperback version of my book on Amazon was $236 even though the cover price is $20. Wow. The Kindle version was reasonably priced at $9.99. But $236? And it wasn’t just one company. There were multiple vendors offering my book in that price range. What happened? You may or […]
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99 vs 97 – Can You Help?
Aug 19, 2014 - Tweet Here is a recent question by email. Thanks Mark for great blog and insightful book. I’m currently working my way through a Kindle edition, learned a lot about pricing that’s for sure and will definitely recommend to clients. One thing I didn’t see you talk about on your blog is the 9 vs 7 […]
Aug 19, 2014 - Tweet Here is a recent question by email. Thanks Mark for great blog and insightful book. I’m currently working my way through a Kindle edition, learned a lot about pricing that’s for sure and will definitely recommend to clients. One thing I didn’t see you talk about on your blog is the 9 vs 7 […]
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Should You Try Two-Part Pricing?
Aug 05, 2014 - Tweet A student recently asked, “when does it make sense to use two-part pricing?” First, let’s define two-part pricing. It is when you charge one fee up front, and then another fee as the product is used. For example, popular bars have a cover charge and then charge for drinks as the night goes on. […]
Aug 05, 2014 - Tweet A student recently asked, “when does it make sense to use two-part pricing?” First, let’s define two-part pricing. It is when you charge one fee up front, and then another fee as the product is used. For example, popular bars have a cover charge and then charge for drinks as the night goes on. […]
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Should Sales Have Pricing Authority? 4 Tips to Make It Feasible
Jul 29, 2014 - Tweet Those of us not in sales often make fun of salespeople, well … because it’s fun. Our first gut reaction says of course we can’t give pricing authority to sales. They will only sell on price and we’ll be giving huge discounts to too many clients. Unfortunately, a lot of salespeople do sell on […]
Jul 29, 2014 - Tweet Those of us not in sales often make fun of salespeople, well … because it’s fun. Our first gut reaction says of course we can’t give pricing authority to sales. They will only sell on price and we’ll be giving huge discounts to too many clients. Unfortunately, a lot of salespeople do sell on […]
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Picking a Favorite Pricing Lesson
Jul 21, 2014 - Tweet This past Thursday I taught the first fully released pricing course for Pragmatic Marketing. The day was better than I could have hoped. The students were energized, asked great questions, contributed their own stories and I’d like to believe they all walked out with a smile on their face and several action items to […]
Jul 21, 2014 - Tweet This past Thursday I taught the first fully released pricing course for Pragmatic Marketing. The day was better than I could have hoped. The students were energized, asked great questions, contributed their own stories and I’d like to believe they all walked out with a smile on their face and several action items to […]
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Innovation and Pricing? It’s About Business Models
Jul 07, 2014 - Tweet Pragmatic Marketing’s box of the month is Innovation. At first glance, what does pricing have to do with innovation? After all innovation is about solving customer problems. Usually with new technologies and capabilities. It’s about new products.  It’s about invention. But wait. Innovation is about solving customer problems. We sometimes have the chance to […]
Jul 07, 2014 - Tweet Pragmatic Marketing’s box of the month is Innovation. At first glance, what does pricing have to do with innovation? After all innovation is about solving customer problems. Usually with new technologies and capabilities. It’s about new products.  It’s about invention. But wait. Innovation is about solving customer problems. We sometimes have the chance to […]
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Psychological Pricing Is Overrated
Jul 01, 2014 - Tweet Psychological pricing is fun. In this field we get to study the effects of prospect theory (where losses loom larger than gains) to yield such odd behavior as the endowment effect (where we value what we have more than if we didn’t own it) and reference pricing (where we use the price we expect […]
Jul 01, 2014 - Tweet Psychological pricing is fun. In this field we get to study the effects of prospect theory (where losses loom larger than gains) to yield such odd behavior as the endowment effect (where we value what we have more than if we didn’t own it) and reference pricing (where we use the price we expect […]
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Freakonomics, Separating Equilibria, and Pricing
Jul 16, 2014 - Tweet Do you like Freakonomics? I sure do. Levitt and Dubner’s latest book, “Think Like a Freak”, is a fun read which I highly recommend. But I had to think hard about chapter 7, “What do King Solomon and David Lee Roth have in common?”. If you haven’t read that chapter, you should, but here’s […]
Jul 16, 2014 - Tweet Do you like Freakonomics? I sure do. Levitt and Dubner’s latest book, “Think Like a Freak”, is a fun read which I highly recommend. But I had to think hard about chapter 7, “What do King Solomon and David Lee Roth have in common?”. If you haven’t read that chapter, you should, but here’s […]
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Help Sales Win at Your Price
Jun 09, 2014 - Tweet Many of us make fun of salespeople especially because they are always asking for discounts.  Can’t they sell value? If they lose a deal, they often blame price. Price, price, price. If we listen to sales we’d believe that every customer only wants to pay the lowest possible price.  Yet, it is true that […]
Jun 09, 2014 - Tweet Many of us make fun of salespeople especially because they are always asking for discounts.  Can’t they sell value? If they lose a deal, they often blame price. Price, price, price. If we listen to sales we’d believe that every customer only wants to pay the lowest possible price.  Yet, it is true that […]
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How do I price my products when my competitors do not display prices on their website?
Jun 24, 2014 - Tweet Question: My company provides training for more than 30 courses. There are 4 other companies which also provide the same courses but they do not show their prices on their website, they tell the price when a customer calls them. Till now whatever price I had shown on the website they used to charge […]
Jun 24, 2014 - Tweet Question: My company provides training for more than 30 courses. There are 4 other companies which also provide the same courses but they do not show their prices on their website, they tell the price when a customer calls them. Till now whatever price I had shown on the website they used to charge […]
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Pricing and Sales Revisited
Jun 11, 2014 - Tweet Two days ago I published a blog on helping your sales team win at your price.   I just read this insightful blog from Mark Hunter, a sales expert, on “Why Your Sales Team is So Afraid of Price“. My favorite quote from Hunter’s piece:  “If price is the reason a customer will or […]
Jun 11, 2014 - Tweet Two days ago I published a blog on helping your sales team win at your price.   I just read this insightful blog from Mark Hunter, a sales expert, on “Why Your Sales Team is So Afraid of Price“. My favorite quote from Hunter’s piece:  “If price is the reason a customer will or […]
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Pricing for Brand Equity – Vodka
Jun 02, 2014 - Tweet The ability to price higher than your competition comes from having differentiated products.  Your products must be better than your competitors’. When we think of positive differentiation, we usually think of what features can we build that our competitors don’t have (yet).  However, one very powerful “attribute” of a product that can create positive […]
Jun 02, 2014 - Tweet The ability to price higher than your competition comes from having differentiated products.  Your products must be better than your competitors’. When we think of positive differentiation, we usually think of what features can we build that our competitors don’t have (yet).  However, one very powerful “attribute” of a product that can create positive […]
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Rebates in The B2B World
May 28, 2014 - Tweet In B2C transactions, mail in rebates are profitable largely because the consumer uses them when making their purchase decision but then often doesn’t send in the forms to receive the rebate. This is free money to the company offering the rebate. For example, nearly half of the 100,000 new TiVo subscribers in 2005 did […]
May 28, 2014 - Tweet In B2C transactions, mail in rebates are profitable largely because the consumer uses them when making their purchase decision but then often doesn’t send in the forms to receive the rebate. This is free money to the company offering the rebate. For example, nearly half of the 100,000 new TiVo subscribers in 2005 did […]
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Pricing is … Part of a Bigger Game
May 20, 2014 - Tweet There’s always a bigger game, especially when it comes to pricing. We often think of pricing as putting a price on a product. This is true, but it’s so much bigger.  Here are several examples. Scope: When we sell one item, we can probably sell more. Think of this as complementary products. By pricing […]
May 20, 2014 - Tweet There’s always a bigger game, especially when it comes to pricing. We often think of pricing as putting a price on a product. This is true, but it’s so much bigger.  Here are several examples. Scope: When we sell one item, we can probably sell more. Think of this as complementary products. By pricing […]
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The Role of Pricing in Defining Product Requirements
May 12, 2014 - Tweet The Pragmatic Marketing theme for this month is “Requirements”. As their pricing blogger I wanted to write on how pricing should help when defining product requirements. Here are my thoughts. What are yours? Let’s start by defining “requirements” as what the product team gives the development organization to work on. These are the next […]
May 12, 2014 - Tweet The Pragmatic Marketing theme for this month is “Requirements”. As their pricing blogger I wanted to write on how pricing should help when defining product requirements. Here are my thoughts. What are yours? Let’s start by defining “requirements” as what the product team gives the development organization to work on. These are the next […]
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Chipotle Price Increase – What Should You Learn?
May 05, 2014 - Tweet This Motley Fool article nicely describes the what and the why of Chipotle’s price increase, but what lessons should you take away for your business? Why are they raising prices? The article gave us three reasons: increasing costs, need to raise same-store revenue, and demand (because they can). As the article pointed out, they are […]
May 05, 2014 - Tweet This Motley Fool article nicely describes the what and the why of Chipotle’s price increase, but what lessons should you take away for your business? Why are they raising prices? The article gave us three reasons: increasing costs, need to raise same-store revenue, and demand (because they can). As the article pointed out, they are […]
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Equal Pay for Women – A Pricing Perspective
Apr 19, 2014 - Tweet Equal pay for women has been in the news a lot lately. Depending on what research you read, women make only 77 cents for every dollar a man makes. Presented like this it certainly seems unfair. And it seems to imply there is a bias against women in business. In my view, your salary […]
Apr 19, 2014 - Tweet Equal pay for women has been in the news a lot lately. Depending on what research you read, women make only 77 cents for every dollar a man makes. Presented like this it certainly seems unfair. And it seems to imply there is a bias against women in business. In my view, your salary […]
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Fixed or Flexible Pricing? That Is A Question
Apr 09, 2014 - Tweet From a reader: Dear Mark, Currently, I carrying out a graduation project for a company in Ethiopia. The graduation project is the final part of my study BSc. Business Engineering which I follow at the Utrecht University of Applied Science (the Netherlands). The pricing strategy of the products of our company (mainly fresh vegetables) […]
Apr 09, 2014 - Tweet From a reader: Dear Mark, Currently, I carrying out a graduation project for a company in Ethiopia. The graduation project is the final part of my study BSc. Business Engineering which I follow at the Utrecht University of Applied Science (the Netherlands). The pricing strategy of the products of our company (mainly fresh vegetables) […]
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Pricing Course for Product Teams
Apr 16, 2014 - Tweet Today, April 16, Pragmatic Marketing announces a new course called Price. As the lead content developer, I found the experience fascinating. The course was developed to help product managers and product teams be more effective through pricing. The question I struggled with though, “what do product people need to know about pricing to do […]
Apr 16, 2014 - Tweet Today, April 16, Pragmatic Marketing announces a new course called Price. As the lead content developer, I found the experience fascinating. The course was developed to help product managers and product teams be more effective through pricing. The question I struggled with though, “what do product people need to know about pricing to do […]
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Pricing at Launch – A Myth Debunked
Mar 31, 2014 - Tweet While talking with companies about how to set a price at launch, I frequently hear the following comment, “We need to start high because it’s harder to raise prices than to lower them.” In fact, this comment passes my ears so often it needs addressed. First, it’s true in some situations. For example, if […]
Mar 31, 2014 - Tweet While talking with companies about how to set a price at launch, I frequently hear the following comment, “We need to start high because it’s harder to raise prices than to lower them.” In fact, this comment passes my ears so often it needs addressed. First, it’s true in some situations. For example, if […]
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To Publish or Not To Publish … Your Prices
Mar 28, 2014 - Tweet   Here is a question I received via email. Hi Mark – you were my instructor at Pragmatic Marketing in Vancouver in November 2013. Can you please remind me why you recommended that we keep our pricing on our website? My Sales VP keeps pushing me to take it off and I just needed […]
Mar 28, 2014 - Tweet   Here is a question I received via email. Hi Mark – you were my instructor at Pragmatic Marketing in Vancouver in November 2013. Can you please remind me why you recommended that we keep our pricing on our website? My Sales VP keeps pushing me to take it off and I just needed […]
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Amazon’s Prime Price Increase – Analysis and Prediction
Mar 15, 2014 - Tweet On Thursday, March 13, Amazon announced they will raise the price of its Prime membership from $79 per year to $99 per year.  Let’s use our Pragmatic Pricing framework to look more closely at this and to make a prediction. First, Amazon Prime is a Will I? product.  Buyers don’t say to themselves, “should […]
Mar 15, 2014 - Tweet On Thursday, March 13, Amazon announced they will raise the price of its Prime membership from $79 per year to $99 per year.  Let’s use our Pragmatic Pricing framework to look more closely at this and to make a prediction. First, Amazon Prime is a Will I? product.  Buyers don’t say to themselves, “should […]
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What Role Does Price Play?
Mar 02, 2014 - Tweet This blog has previously discussed the importance of Will I? and Which one?, the two decisions our customers make before almost any purchase. If you want to know more try this post Will I? Which one?. Recently, while working with a company on their pricing strategy, I asked, “Do your customer purchase just after […]
Mar 02, 2014 - Tweet This blog has previously discussed the importance of Will I? and Which one?, the two decisions our customers make before almost any purchase. If you want to know more try this post Will I? Which one?. Recently, while working with a company on their pricing strategy, I asked, “Do your customer purchase just after […]
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Do We Win or Lose Based on Price?
Feb 14, 2014 - Tweet Of course we do.  But it’s not that simple. Ask a salesperson why we lost a deal and you’ll hear one of two answers:  The price was too high or the product wasn’t good enough.  Ask him why we won and you’ll hear it was because he had a great relationship with his customer. […]
Feb 14, 2014 - Tweet Of course we do.  But it’s not that simple. Ask a salesperson why we lost a deal and you’ll hear one of two answers:  The price was too high or the product wasn’t good enough.  Ask him why we won and you’ll hear it was because he had a great relationship with his customer. […]
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Who Owns Pricing?
Feb 03, 2014 - Tweet This is one of the most frequent questions I’m asked.  Should pricing belong to Finance, Product Lines (product management), Marketing, Sales Operations (deal desk), or even Sales?  What do you think? My answer:  ”Yes!”  Effective pricing requires participation from all of these departments. Finance must provide margin guidance and help with monitoring of actual results […]
Feb 03, 2014 - Tweet This is one of the most frequent questions I’m asked.  Should pricing belong to Finance, Product Lines (product management), Marketing, Sales Operations (deal desk), or even Sales?  What do you think? My answer:  ”Yes!”  Effective pricing requires participation from all of these departments. Finance must provide margin guidance and help with monitoring of actual results […]
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Independent Service Provider Pricing
Jan 24, 2014 - Tweet I recently received this question: “Hi Mark, I’m a consistent reader of Pragmatic Pricing and try to apply each concept to my own business.  As a consultant, I take on projects and bill by the hour.  How can I apply Good, Better, Best?  Thanks, Bill.” Thanks for the question, Bill.  Many people sell their […]
Jan 24, 2014 - Tweet I recently received this question: “Hi Mark, I’m a consistent reader of Pragmatic Pricing and try to apply each concept to my own business.  As a consultant, I take on projects and bill by the hour.  How can I apply Good, Better, Best?  Thanks, Bill.” Thanks for the question, Bill.  Many people sell their […]
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Netflix Prices Right?
Jan 03, 2014 - Tweet Bloomberg and others recently reported that Netflix is testing a price “increase”.  Congratulations to them! I’ve been pretty harsh in the past with how poorly they handled pricing.  This time I think they are absolutely spot on.  Two things we should learn from what they are doing. First, they are TESTING!  They aren’t announcing […]
Jan 03, 2014 - Tweet Bloomberg and others recently reported that Netflix is testing a price “increase”.  Congratulations to them! I’ve been pretty harsh in the past with how poorly they handled pricing.  This time I think they are absolutely spot on.  Two things we should learn from what they are doing. First, they are TESTING!  They aren’t announcing […]
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Strategic Discounting
Dec 22, 2013 - Tweet The other night our friend James von Rittmann regaled us with fascinating stories of how before going to college he managed to buy the Americana, a 140 foot boat commissioned by Al Capone in 1927 and launched in 1930. James chartered the boat out in the New England area for large parties on a […]
Dec 22, 2013 - Tweet The other night our friend James von Rittmann regaled us with fascinating stories of how before going to college he managed to buy the Americana, a 140 foot boat commissioned by Al Capone in 1927 and launched in 1930. James chartered the boat out in the New England area for large parties on a […]
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Ridiculously High Prices for Hotel Rooms. Seriously?
Dec 29, 2013 - Tweet The other day while traveling, a colleague asked me, “Why do hotels publish these ridiculously high prices on the back of the hotel room door?  The sign says $799 but we only paid $150″.  I went back to my hotel room and snapped this picture. Although I was unable to find the definitive answer, […]
Dec 29, 2013 - Tweet The other day while traveling, a colleague asked me, “Why do hotels publish these ridiculously high prices on the back of the hotel room door?  The sign says $799 but we only paid $150″.  I went back to my hotel room and snapped this picture. Although I was unable to find the definitive answer, […]
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Charge More, Sell More?
Dec 14, 2013 - Tweet   A reader sent the following email: Mark, I always enjoy reading your Pragmatic Pricing site and got this link sent to me from a friend.  Once I saw it, you were the first person I thought of. The Cards Against Humanity team came up with this idea, got Amazon to go along with it, and crushed it […]
Dec 14, 2013 - Tweet   A reader sent the following email: Mark, I always enjoy reading your Pragmatic Pricing site and got this link sent to me from a friend.  Once I saw it, you were the first person I thought of. The Cards Against Humanity team came up with this idea, got Amazon to go along with it, and crushed it […]
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Cheap Talk to Avoid a Price War
Nov 30, 2013 - Tweet As we plunge into the holiday shopping season, many business news organizations write about the impending price wars. The following excerpt from the November 20, 2013 Wall Street Journal article titled “Price War Looms For Electronics” screamed out at me that there is a lesson here to be learned about trying to avoid a price […]
Nov 30, 2013 - Tweet As we plunge into the holiday shopping season, many business news organizations write about the impending price wars. The following excerpt from the November 20, 2013 Wall Street Journal article titled “Price War Looms For Electronics” screamed out at me that there is a lesson here to be learned about trying to avoid a price […]
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The Pricing Power in Constraints
Nov 26, 2013 - Tweet Where are the constraints?  Look around your company, your industry.  These constraints provide pricing power. Think about supply and demand.  Years ago I wrote a blog post on how supply and demand aren’t typically related to pricing because supply is usually abundant.  Implicit collusion, not supply and demand holds prices above costs. Today, let’s […]
Nov 26, 2013 - Tweet Where are the constraints?  Look around your company, your industry.  These constraints provide pricing power. Think about supply and demand.  Years ago I wrote a blog post on how supply and demand aren’t typically related to pricing because supply is usually abundant.  Implicit collusion, not supply and demand holds prices above costs. Today, let’s […]
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3 Steps to Create Good, Better, Best
Nov 15, 2013 - Tweet OK, you have accepted the premise that you need a good, better, best strategy, now the question is how to do it? This question was asked by a startup company this past week. They have the majority of a pretty broad software application already completed. How do they decide what to cut or add […]
Nov 15, 2013 - Tweet OK, you have accepted the premise that you need a good, better, best strategy, now the question is how to do it? This question was asked by a startup company this past week. They have the majority of a pretty broad software application already completed. How do they decide what to cut or add […]
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Pricing is … a KPI
Oct 27, 2013 - Tweet What KPI’s (Key Performance Indicators) do you track in your company? You are probably monitoring revenue, profit, certain expenses, and hopefully more. Do you use price as a KPI? If not, you should consider it. Your marketing and development team created a product, built in value, and set a price to capture that value. […]
Oct 27, 2013 - Tweet What KPI’s (Key Performance Indicators) do you track in your company? You are probably monitoring revenue, profit, certain expenses, and hopefully more. Do you use price as a KPI? If not, you should consider it. Your marketing and development team created a product, built in value, and set a price to capture that value. […]
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Segmented Pay As You Wish
Oct 05, 2013 - Tweet The other day I learned Brian, a friend of mine, uses an interesting pricing strategy, segmented pay as you wish. As you’ve read here in previous blogs, you really should segment your pricing. You want to charge different customers different prices based on their willingness to pay. What was unique about Brian’s pricing strategy […]
Oct 05, 2013 - Tweet The other day I learned Brian, a friend of mine, uses an interesting pricing strategy, segmented pay as you wish. As you’ve read here in previous blogs, you really should segment your pricing. You want to charge different customers different prices based on their willingness to pay. What was unique about Brian’s pricing strategy […]
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What is “What the Market Will Bear”?
Oct 19, 2013 - Tweet When asking business people how to set price, I often hear the answer, “Charge what the market will bear.” Think about that answer for a second. What does it mean? The underlying sentiment is positively spot-on. We should set prices based on what our customers are willing to pay, not based on our costs. […]
Oct 19, 2013 - Tweet When asking business people how to set price, I often hear the answer, “Charge what the market will bear.” Think about that answer for a second. What does it mean? The underlying sentiment is positively spot-on. We should set prices based on what our customers are willing to pay, not based on our costs. […]
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Pragmatic Pricing Luncheon in Scottsdale
Oct 31, 2013 - Tweet Pragmatic Marketing is sponsoring a lunch and learn event on pricing in Scottsdale on November 13.  The lunch starts at 11:30 and the learning starts at noon. If you’re in the area, come learn about value based pricing, price segmentation and pricing a product portfolio.  There will be time for Q&A where you may […]
Oct 31, 2013 - Tweet Pragmatic Marketing is sponsoring a lunch and learn event on pricing in Scottsdale on November 13.  The lunch starts at 11:30 and the learning starts at noon. If you’re in the area, come learn about value based pricing, price segmentation and pricing a product portfolio.  There will be time for Q&A where you may […]
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Specialty Retailers: Choose Your Brands Wisely
Sep 20, 2013 - Tweet This week I had the privilege of speaking to independent bicycle dealers at Interbike. What a great experience. Bicycle dealers are passionate about their businesses. They walk their talk. Their hobby is their job. Unfortunately, it appears that manufacturers take advantage of them. The problem is, many bicycle dealers love bikes more than they […]
Sep 20, 2013 - Tweet This week I had the privilege of speaking to independent bicycle dealers at Interbike. What a great experience. Bicycle dealers are passionate about their businesses. They walk their talk. Their hobby is their job. Unfortunately, it appears that manufacturers take advantage of them. The problem is, many bicycle dealers love bikes more than they […]
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Pricing is … the Nuclear Bomb of Business
Sep 12, 2013 - Tweet Of all of the tools business people have, pricing is the most powerful and the most dangerous. It’s like having a nuclear bomb, especially in 3 areas. First, pricing can be very destructive. When you lower your prices, that certainly hurts your competitors. When they retaliate, and they almost certainly will, that will hurt […]
Sep 12, 2013 - Tweet Of all of the tools business people have, pricing is the most powerful and the most dangerous. It’s like having a nuclear bomb, especially in 3 areas. First, pricing can be very destructive. When you lower your prices, that certainly hurts your competitors. When they retaliate, and they almost certainly will, that will hurt […]
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Four Reasons Why Your Salespeople Discount
Aug 31, 2013 - Tweet Do your salespeople discount … too much? Too often? Too quickly? Many companies answer these three questions: Yes! Yes! Yes! For such a universal and blatant problem, why does it still happen? Why can’t salespeople just do their job and stop discounting? The answer: it probably isn’t sales’ fault (completely). After all, they are […]
Aug 31, 2013 - Tweet Do your salespeople discount … too much? Too often? Too quickly? Many companies answer these three questions: Yes! Yes! Yes! For such a universal and blatant problem, why does it still happen? Why can’t salespeople just do their job and stop discounting? The answer: it probably isn’t sales’ fault (completely). After all, they are […]
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Money or Time – It’s Pervasive in Pricing
Aug 09, 2015 - I recently took up paragliding.  Awesome sport!  Once you’re good at paragliding, it’s pretty easy.  You fly a kite, take a few steps, take off, sit down in your harness and fly.  Awesome!!!  However, while you’re learning, it’s a lot of running, schlepping gear, untangling lines, oh, and a lot of waiting. While running, schlepping, untangling and waiting, I would often think of a quote from Patricia Fripp, a world class speaker coach, that went something like this:  “When you’re early in your career, you have more time than money.  Later in your career you will have more money than time.” As a 54 year old sweating, panting, exhausted man who has more money than time (or energy), I kept wondering why my instructor didn’t have an “elite” training package.  I would have paid more to have a program with less schlepping and waiting (the running I had to do and the untangling I had to learn.)  My instructor could have segmented his market.  (Of course I don’t know how big the market is for out of shape old people who want to learn paragliding.) The more I obsessed on this, the more I realized this concept of money vs. time is pervasive […]
Aug 09, 2015 - I recently took up paragliding.  Awesome sport!  Once you’re good at paragliding, it’s pretty easy.  You fly a kite, take a few steps, take off, sit down in your harness and fly.  Awesome!!!  However, while you’re learning, it’s a lot of running, schlepping gear, untangling lines, oh, and a lot of waiting. While running, schlepping, untangling and waiting, I would often think of a quote from Patricia Fripp, a world class speaker coach, that went something like this:  “When you’re early in your career, you have more time than money.  Later in your career you will have more money than time.” As a 54 year old sweating, panting, exhausted man who has more money than time (or energy), I kept wondering why my instructor didn’t have an “elite” training package.  I would have paid more to have a program with less schlepping and waiting (the running I had to do and the untangling I had to learn.)  My instructor could have segmented his market.  (Of course I don’t know how big the market is for out of shape old people who want to learn paragliding.) The more I obsessed on this, the more I realized this concept of money vs. time is pervasive […]
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The Peril of Price Increases – Breaking Brand Loyalty
May 26, 2013 - The absolute BEST thing about our loyal customers is that they don’t even think about which one to buy.  They always choose our product.  Awesome.  No extra marketing effort.  No extra sales effort.  Just keep shipping quality product and life is good. Until you increase prices. Don’t get me wrong.  I love price increases … [...]
May 26, 2013 - The absolute BEST thing about our loyal customers is that they don’t even think about which one to buy.  They always choose our product.  Awesome.  No extra marketing effort.  No extra sales effort.  Just keep shipping quality product and life is good. Until you increase prices. Don’t get me wrong.  I love price increases … [...]
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Showrooming is Like Using a Big Coupon
Jul 28, 2013 - Tweet How much of your life are you willing to trade for a better price? Coupons work because they are only used by people who are price sensitive. The only people who use coupons are those who think it is worth the time and energy to find the coupon, clip the coupon, store it in […]
Jul 28, 2013 - Tweet How much of your life are you willing to trade for a better price? Coupons work because they are only used by people who are price sensitive. The only people who use coupons are those who think it is worth the time and energy to find the coupon, clip the coupon, store it in […]
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Irrelevant Price Comparisons – How They Work
Jun 29, 2013 - Tweet “Rice flavoring is more expensive than a Porsche.” “Ink costs more than blood.” “Bottled water costs more than gas.” Surely you’ve heard many more of these shocking comparisons.  Read any of these linked articles and you find they are justifiably true.  On a price per weight basis, rice flavoring is more expensive than a […]
Jun 29, 2013 - Tweet “Rice flavoring is more expensive than a Porsche.” “Ink costs more than blood.” “Bottled water costs more than gas.” Surely you’ve heard many more of these shocking comparisons.  Read any of these linked articles and you find they are justifiably true.  On a price per weight basis, rice flavoring is more expensive than a […]
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Value Based Pricing Is Only an Attitude
Jul 06, 2013 - Tweet Value Based Pricing means charging what your customers are willing to pay (WTP). The other day I was describing this to a successful, self employed business woman, and she kept asking, “How do I know what my customers are willing to pay?” I mentioned how she should put herself in her customers’ shoes, compare […]
Jul 06, 2013 - Tweet Value Based Pricing means charging what your customers are willing to pay (WTP). The other day I was describing this to a successful, self employed business woman, and she kept asking, “How do I know what my customers are willing to pay?” I mentioned how she should put herself in her customers’ shoes, compare […]
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What You Don't Know Does Cost You
Jul 16, 2013 - Tweet Do you buy generic aspirin (i.e. the store brand) or Bayer? Do you buy generic acetaminophen or Tylenol? How about generic ibuprofen or Advil. It turns out 70% of us buy generics. Higher than I expected, but still 30% of us pay for the brand name. For those of us who buy the brand […]
Jul 16, 2013 - Tweet Do you buy generic aspirin (i.e. the store brand) or Bayer? Do you buy generic acetaminophen or Tylenol? How about generic ibuprofen or Advil. It turns out 70% of us buy generics. Higher than I expected, but still 30% of us pay for the brand name. For those of us who buy the brand […]
Blog Post
Pricing is … a Magnifying Glass
Jul 21, 2013 - Tweet Managers who understand pricing well have a unique view into the health of their company. Here are several examples. How well do our marketers use Value Based Pricing when setting the initial prices? When we do this well, we truly understand our market. We know what our competition offers and at what price. We […]
Jul 21, 2013 - Tweet Managers who understand pricing well have a unique view into the health of their company. Here are several examples. How well do our marketers use Value Based Pricing when setting the initial prices? When we do this well, we truly understand our market. We know what our competition offers and at what price. We […]
Blog Post
How Much Would You Pay?
Aug 21, 2013 - Tweet What a horrible question.  If you’re trying to figure out how much to charge for your product, this is NOT how to do it.  Why?  There are two main reasons. First, respondents don’t know how to answer it.  Look at whatever you are reading this blog on: your computer, your tablet, your phone.  If […]
Aug 21, 2013 - Tweet What a horrible question.  If you’re trying to figure out how much to charge for your product, this is NOT how to do it.  Why?  There are two main reasons. First, respondents don’t know how to answer it.  Look at whatever you are reading this blog on: your computer, your tablet, your phone.  If […]
Blog Post
Kid Rock Plays with Pricing
Jun 09, 2013 - Tweet This article in the Wall Street Journal describes how Kid Rock is changing the business model for his upcoming tour.  He is lowering the price for almost all of the seats to $20 and in exchange will begin receiving a cut of the concessions. As all new business models should be, this may be [...]
Jun 09, 2013 - Tweet This article in the Wall Street Journal describes how Kid Rock is changing the business model for his upcoming tour.  He is lowering the price for almost all of the seats to $20 and in exchange will begin receiving a cut of the concessions. As all new business models should be, this may be [...]
Blog Post
Should You Unbundle?
Jun 15, 2013 - Tweet A friend recently asked about a Pragmatic Pricing blog from 2 and a half years ago.  It was about the furor that was going on when the airlines were unbundling – they were beginning to charge for checked luggage.  It’s very interesting to re-read that blog now that we have emotional distance from the [...]
Jun 15, 2013 - Tweet A friend recently asked about a Pragmatic Pricing blog from 2 and a half years ago.  It was about the furor that was going on when the airlines were unbundling – they were beginning to charge for checked luggage.  It’s very interesting to re-read that blog now that we have emotional distance from the [...]
Blog Post
How to Earn a Raise – Lessons from Pricing
Jun 23, 2013 - Tweet The other day one of my employees asked for a raise.  Believe it or not, as director of pricing at a large company, I don’t really have much influence on the salaries of my people.  However, I wanted to give him thoughtful advice on how to get a raise. This is just a pricing [...]
Jun 23, 2013 - Tweet The other day one of my employees asked for a raise.  Believe it or not, as director of pricing at a large company, I don’t really have much influence on the salaries of my people.  However, I wanted to give him thoughtful advice on how to get a raise. This is just a pricing [...]
Blog Post
Beware of Pricing Consultants
Aug 12, 2013 - Tweet I’ve had the pleasure of working with many pricing consultants. They were all smart and I’ve learned from each one. Now that I’ve said something nice … Pricing consultants do have the ability to quickly increase your profitability while at the same time destroying your company. (OK, maybe destroy is an exaggeration, but not […]
Aug 12, 2013 - Tweet I’ve had the pleasure of working with many pricing consultants. They were all smart and I’ve learned from each one. Now that I’ve said something nice … Pricing consultants do have the ability to quickly increase your profitability while at the same time destroying your company. (OK, maybe destroy is an exaggeration, but not […]
Article
Why the Product Team Must Own Pricing
Aug 28, 2017 - Who should own pricing? When I ask students this question, it almost always evokes emotion. Some people respond confidently, while others...
Aug 28, 2017 - Who should own pricing? When I ask students this question, it almost always evokes emotion. Some people respond confidently, while others...
Webinar
Distinctive Competencies: Why There's No Such Thing as a Commodity
May 22, 2017 - Distinctive competencies are powerful things, but too many companies fail to recognize their importance or spend the time required to identify...
May 22, 2017 - Distinctive competencies are powerful things, but too many companies fail to recognize their importance or spend the time required to identify...
Article
Kill the Zombies
Jun 03, 2016 - Do some customers still use an old product that you want to get rid of? Have you ever wondered how much...
Jun 03, 2016 - Do some customers still use an old product that you want to get rid of? Have you ever wondered how much...
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