If a tree falls in the woods and no one hears it, does it make a sound? If your offering has value that customers don’t perceive, can you charge for it? Price is limited by perceived differential value. So if … Read More
pricing techniques
How do you measure risk?
Few decisions in business or in life are without risk. The outcomes we expect from our decisions depend in some part on a set of assumptions about the world around us. For big decisions with a large impact, we often … Read More
Experimental Economics: Finding Millions of Dollars in the Haystack
Wired recently ran a story on Experimental Economists, who model complex scenarios and attempt to optimize outcomes for large companies and government agencies. My reaction to the story was “wow– that’s what Mimiran does all the time, we just didn’t … Read More
When Buying Larger Quantities is a Worse Deal
When you buy in bulk, you typically get a better deal. On a per-unit basis, it’s cheaper to buy a 32-pack of Coca Cola at Costco than a single can in a convenience store. The same concept applies in industrial … Read More
Unbundling
Have you been part of a discussion where everyone at your company believed that their offering provided more value than a competitor’s, but the customers just don’t see it? The marketing team often thinks sales doesn’t know how to sell … Read More
Price Segmentation
Outside of work, when people learn what I do for a living, I tend to get one of two responses. Most likely, people nod politely while looking for exits. Or, they tell me “we sell widgets, and I know we’re … Read More
A Powerful Pricing Thought Experiment
Courtesy of Seth Godin, who asks you to think about real estate agents charging 6% of a transaction, and facing mounting price pressure. The challenge is… what if you had to charge 7%. What if you had to charge more … Read More
Six Sigma Pricing: Improving Pricing Operations to Increase Profits
Six Sigma Pricing: Improving Pricing Operations to Increase Profitsby ManMohan S. Sodhi and Navdeep S. Sodhi288 pages If your company negotiates prices, you need to read this book. The authors provide a welcome operational complement to the much broader literature … Read More
(E)Book Pricing, Part 2
The folks over at Wrox are running a pricing experiment. They’re discounting their ebooks by 50% to see how much extra volume they get, and whether they can convert people who steal ebooks into paying customers. While this is an … Read More
The Math of Multiple Discounts
Recent research by Akshay Rao and Haipeng Chen confirms that people have a hard time processing a sequence of percentage discounts. For example, if you have a $100 item at 20% off, and then take another 20% off, what is … Read More