Josh Kopelman over at the Redeye VC blog has a great post (see image from post– click for larger image in original post) on the importance of the part of the demand curve when the price moves from “free” to … Read More
pricing strategy
How Far to Unbundle?
Unbundling offerings can be a great way to increase revenue by charging people for what they value. Hotels are experts at this. They offer a room at a relatively low rate, then charge $10 for breakfast, $9.95 for internet access, … Read More
Value Trade Offs in the Mind of the Customer
The limiting factor on price is the differential value the customer perceives. By definition, that perception takes place in the customer’s head. Research by Marketing Professor Alexander Chernev of Northwestern University’s Kellogg School of Management and cited in Forbes suggests … Read More
When the Price is the Value, Can You Price too High?
The value of many luxury items is that they have no intrinsic value, but their conspicuous consumption demonstrates the wealth and social standing of the buyer. You can therefore charge much higher prices, mainly just by charging higher prices. (You … Read More
Webinar on Effective Pricing and Value Capture
On Wednesday, January 24, I’ll be presenting a webinar on Effective Pricing and Value Capture at 12 noon EST. If you don’t make it live, we will make a recording available later (we’ll post a link here). Effective Pricing and … Read More
Motorola Lays Off 3,500, Cites Pricing Problems
Electronics giant Motorola, the number 2 maker of cellphones after Nokia, announced that it will shed 3,500 jobs in a cost-cutting move after overly aggressive discounts trimmed profits. Motorola reported net income of $624M, off nearly 50% from a year … Read More
Why Price Wars Are a Bad Idea
People are competitive. Companies are competitive. They want to beat each other, they want to “win.” That’s why otherwise smart people often start or join price wars. Price wars transfer money from sellers to buyers. This is not a good … Read More
Index Pricing
Do you suffer from wild cost fluctuations due to changing commodity prices, but find it hard to pass rising costs through to customers? One approach is to create a separate line item for the commodity, tied to the actual price … Read More
Pricing for “No”
Many people price to hear “yes.” They do not want to encounter price objections, so it’s simply easier to set a low price. This is a dangerous practice for any business, but it’s particularly acute for small businesses with little … Read More
Price Instability as a Marketing Tactic
Who wants to encourage people to shop around? Don’t we want buyers to come back to our store and only our store every time? The internet will bring new levels of transparency and power to the buyer, right? Not necessarily, … Read More