How can you charge more for a commodity? Here’s one of my favorite examples. 24 ounces of ketchup at $0.07/oz. Turn that idea on its head. 32 ounces at $0.079/oz. The price per unit goes up almost 13%. Not bad for a commodity. Note that the different sizes make it harder for buyers to know [...]
If your maximum price is determined by the perceived differential value of your offering, how do you know what value customers perceive. Many of them won’t tell you, especially if they think you’ll use that information to jack up the price. Here’s an example of a product that for many buyers has a really high [...]
In my line of work, I encounter a lot of small business owners who set their prices by copying the “going price” in “the market” or by sticking their fingers in the wind. This is unfortunate, but fixable. What really frustrates me are when those same people, years down the road, are trying to figure [...]
A lot of businesses think they have a great product or service. Something above and beyond what the competition offers. But when it comes time to put a price on all this awesomeness, they are still cheaper than the competition. This is a particular problem for small, service-oriented businesses that try to compete with larger [...]
This summer, Steve Silberman over at Wired wrote a great article called “Placebos Are Getting More Effective. Drugmakers Are Desperate to Know Why.” While the implications for pricing in the pharmaceutical industry are obvious, there are also important analogies to pricing activities in a much broader range of companies. The article discusses how big pharma [...]
We’ve had other discussions about how for some luxury goods, the exorbitant price is part of the value (see $300,000 watches that only tell you whether it’s day or night). Meanwhile, as some of you may have heard, Apple launched a new iPhone, along with the AppStore, which allows iPhone owners to install applications, much [...]
Here’s an interesting pricing model for t-shirts. 200nipples (yes, even the name is, umm, remarkable) sells limited edition runs of 100 tshirts. The first shirt costs $1, the second $2, all the way up to $100. This has the nice effect of rewarding your most loyal fans, who presumably will get some pretty cheap shirts, [...]
In last week’s post How to Raise Prices, I referenced two interesting articles on techniques for raising prices, and also suggested using unbundling to differentiate between customers who want maximum value and customers who want minimum price. Today, let’s look at three interesting price increases– Oracle’s list price increases, Apple’s iPhone price “decrease”, and airline [...]
Although I’ve said before that with luxury items, the price is the value, I’m still occasionally astounded. Now along comes one of the most absurd items I’ve ever seen. Swiss watchmaker Romain Jerome created a watch they call “Night & Day.” Why do they call it that? I’m glad you asked. Because it doesn’t actually [...]
For many people watching the Elliot Spitzer scandal unfold, the shocking part of the story was not that a powerful politician went to a prostitute. That seems almost retro these days. What seemed jaw-dropping was the amount of money Spitzer was paying out. Well, it turns out that the world’s oldest profession knows a thing [...]
