Pricing

Blog
Become a Pricing Champion!
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. 
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. 
Blog
Failed Price Segmentation (Dynamic Pricing)
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. 
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. 
Blog
Why Do Companies Compete Harder on Black Friday?
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. […]
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. […]
Blog
A Fantastic Example of Price Segmentation Using Distribution
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.  
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.  
Blog
What Zillow Can Teach You About Your Pricing Analytics
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.
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.
Blog
Surge Pricing and Fairness
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.
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.
Blog
Gouging Is Good, But Not Advised
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...
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...
Magazine
Back to School
Become a perpetual student. If you want to succeed, you must regularly learn new concepts and continually refresh the topics that matter most: understanding the markets and ensuring that everything you do addresses their problems. In this issue of Pragmatic Marketer we reexamine some core subjects (pricing, messaging, prioritization), as well...
Become a perpetual student. If you want to succeed, you must regularly learn new concepts and continually refresh the topics that matter most: understanding the markets and ensuring that everything you do addresses their problems. In this issue of Pragmatic Marketer we reexamine some core subjects (pricing, messaging, prioritization), as well...
Article
Why the Product Team Must Own Pricing
Who should own pricing? When I ask students this question, it almost always evokes emotion. Some people respond confidently, while others are more sheepish. And a lot of people think their companies are doing it wrong. Before we answer this question, it’s important to define just what it means, because there are...
Who should own pricing? When I ask students this question, it almost always evokes emotion. Some people respond confidently, while others are more sheepish. And a lot of people think their companies are doing it wrong. Before we answer this question, it’s important to define just what it means, because there are...
Blog
Value Conversations in Pricing
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 […]
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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