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This Week in Pricing > 10/4/14

TWIP is a recap of the week’s best pricing focused news, strategy expert and technology leader’s thought leadership, industry news and events, and resources for pricing professionals.

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The Week’s Top Headlines

What Went Wrong – 101 Failed Startups Tell All | Inc.com

Pricing/cost issues: 18 percent If you’re selling a product or service no one’s ever heard of before, it’s hard to figure out how much to charge and what pricing model has the best chance of success. That’s what happened to Delight.io, which tracked app users’ interactions with their devices. “We originally price[d] by the number […]

Infographic – How Price Affects a Consumer’s Path to Purchase | Adweek

Knowing and trusting a brand is a prime consideration for penny buys while good reviews top the list of criteria for expensive purchases. Here’s how the buying journey differs for a small purchase of less than $10, compared to a large purchase over $1,000. Read complete article here: Infographic – How Price Affects a Consumer’s […]

Why Do Outlet Stores Exist? | Harvard Business School

Ngwe has also used the same data to look at other pricing strategies by companies—including the ubiquity of listing items as “on sale” that are almost never offered at the actual price on the tag. “A company will offer a $300 blouse for 30 percent off, but you couldn’t buy the blouse for $300 even […]

What an Economist Brings to a Business Strategy | Harvard Business Review

Priceline introduced the “conditional price offer,” an economic notion developed by the company’s founder, Jay Walker, who put his undergraduate economics training to good use to form a company that has revolutionized travel. Walker’s innovation was to bind travelers to pay the prices they bid if the airlines and hoteliers on Priceline accepted the offers. […]

Why Pricing Outliers Aren’t All Bad | PricingBrew

We love it when PricingBrew Journal subscribers ask questions through our Answer Archive and Ask the Network features. It’s a great way to help our subscribers with the specific issues they’re grappling with every day, and it provides a lot of insight into the concepts and topics that require further clarification. For example, we get […]

How Social Media and Mobile Change Pricing Strategies | Heidi Cohen

Pricing’s 5 Biggest Challenges (and 13 Tips to Handle Them) While pricing has always been hard, in today’s social media engaged, mobile connected world, pricing is even more challenging because the changing environment has increased the risks. Defined by Merriam-Webster as the quantity of one thing that’s exchanged or demanded for another, pricing has a direct impact on your […]

Price to profit – Five steps to above-market growth | McKinsey&Company

An international provider of technical gases had a large, highly fragmented product portfolio of more than 500 SKUs, customers in a range of industries, and a broad segmentation of customers by size. As a result, its prices varied widely even for the same product. Managers felt that there was room to increase prices overall, but […]

IVDI – The Greatest Luxury Goods Pricing Strategy You’ve Never Heard Of | Business 2 Community

The Breakdown Essentially, the IVDI formula creates an index for any luxury product category so long as you have basic information on other brands in the same industry. This is an incredibly useful way to predict consumer thinking without having to test different price points on the shelf. In the below formula, “Ut” represents utilitarian […]

Is Price Optimization Really an Evil Idea? | Insurance Thought Leadership

The extent of the use of price optimization in the insurance industry is small in terms of the number of companies that have implemented optimization or are conducting pilots. It is, however, important to note that price optimization is being adopted by the largest insurance companies — those that have the most market share — […]

Five Strategic Uses of Pricing Analytics | PricingBrew

When people think about pricing analytics, what often comes to mind is a whole host of tactical activities—things like identifying discount outliers, evaluating and analyzing specific deals, and monitoring and reporting price and margin trends. But a new guide in the PricingBrew Journal, “Driving Strategic Decisions with Pricing Analytics,” makes the assertion that in the […]

6 Ways Buyers Gain The Upper Hand With Salespeople | Forbes

3. During a face-to-face meeting, buyers are quick to look for any sign of body language that indicates you don’t believe in the price A basic rule buyers use is to watch the salesperson’s facial expression and eye contact when they are talking about price or presenting their offer. If the salesperson can’t give the […]

$199 Apple iPhone 6 Is Fiction, if Not Fantasy | NYTimes.com

“I think it’s fair to say that people wouldn’t be as motivated to go out and buy if they thought it was a $650 purchase,” said Craig Moffett, senior analyst and a partner at MoffettNathanson Research. “And if you look at the marketing issues and the accounting issues, it’s fair to conclude that the companies […]

Impact of iPhone 6 on iPhone 5 pricing and sales | TechRepublic

It’s interesting how prices for all models jumped a bit right after the iPhone 6 announcement – especially for the base iPhone 5. This could be the result of a “hoarder” instinct – either real or expected – whereby the perceived value of the current model was deemed overly high in anticipation that those consumers […]

iPhone Pricing Lessons | Strategic Pricing Solutions

The iPhone 6 was released September 19th, and as expected, there was significant buzz and demand for the phone.  Similar to the releases of earlier versions of the iPhone, there were some pricing moves that are worth studying.  From my perspective, there are both positive and negative pricing lessons we can learn.  The first (positive) […]

Radiohead frontman surprises with album by file-sharing | Bangkok Post

NEW YORK – Radiohead’s ever-experimental frontman Thom Yorke on Friday released a surprise new album through computer file-sharing, testing a new way of revenue generation that he hopes can directly benefit musicians. Thom Yorke, who recently released a suprise solo album, performs at the Optimus Alive music festival at Alges, on the outskirts of Lisbon, […]

Gasoline prices head below $3 in much of U.S. | Lubbock Avalanche-Journal

NEW YORK — The price of a gallon of gasoline may soon start with a “2’’ across much the country. Gasoline prices typically decline in autumn, and this year they are being pulled even lower by falling global oil prices. By the end of the year, up to 30 states could have an average gasoline […]

Whole Foods crops its produce prices in Austin stores | Austin Business Journal

Whole Foods Market Inc. is testing a rigorous price-cutting strategy in all five of its Austin-area locations, part of a pilot program that could eventually be expanded to other stores in the organic grocery chain, according to a report in the Austin American-Statesman. Nationwide, analysts have noticed an overall downward trend in the prices offered […]

Analysis – Will Sainsbury’s new pricing strategy and Brand Match changes strengthen its position against Asda and the discounters? | Retail Week

Not a real price war? Gray believes the price cuts and change to Brand Match are a marketing play rather than the start of a genuine price war. He points out that the change did not need to be announced to the City so the price cuts must be from money already allocated. “They are […]

Aldi vows to fight on in supermarket price war as UK profits leap 65% | The Guardian

German discount store says it will respond to price cuts from competitors with further reductions as sales rise 36% to £5.3bn Aldi has vowed to maintain the supermarket price war that has drawn legions of cost-conscious shoppers to its aisles as it announced a 65% increase in its UK profits. The German discounter said it […]

Sainsbury’s shifts to a mid-low model pricing strategy | The Grocer

Sainsbury’s has overhauled its pricing strategy and revamped its Brand Match scheme to compare prices against Asda and not Tesco as it looks to address the new reality in UK grocery. The retailer said it had moved to a mid-low pricing strategy after reducing the price of about 12,000 products over the past 18 months, […]

Pricing the Cloud 2014 Market Research Report With 2019 Cloud Computing Pricing and Revenue Forecasts | MarketWatch

ReportsnReports.com offers “Pricing the Cloud” market research report published in 2014 and providing examples of pricing trends and a forecast for cloud computing pricing and revenues over the 5 year period from 2014 to 2019. This report also provides coverage of global public cloud pricing with a comparison of virtual CPU, storage and bandwidth pricing […]

Oracle Cloud to Match Amazon.com’s Pricing, Ellison Says | Bloomberg

Oracle Corp. (ORCL) said its cloud service will match rival Amazon.com Inc.’s pricing as it competes to help companies operate databases and software over the Internet rather than at their own data centers. Oracle will “have the same pricing as Amazon or any other infrastructure provider,” Chairman Larry Ellison said at the Oracle OpenWorld conference […]

Cincinnati parking meter prices could be as flexible as cost of a Reds ticket | Cincinnati Business Courier

The city of Cincinnati is on the verge of signing a contract with Xerox that would allow the city to install high-tech parking meters with analytic capabilities that allow the price of parking to change based on demand. The concept, which has gained traction in professional sports in recent years, is called dynamic pricing. The […]

Seattle to install new parking meters that adjust price based on demand | GeekWire

Seattle is getting strategic with its parking rates. The Department of Transportation received approval from the City Council on Monday to begin on a 2-year project that will upgrade each of Seattle’s 2,200 parking meters with dynamic pricing technology. That means, by 2016, you may see two different prices during the day on the same parking meter […]

Ageas to offer dynamic pricing on commercial vehicles | Insurance Times

Transactor Global Solutions has partnered with Ageas to offer dynamic pricing on commercial vehicles. The deal means Ageas will offer dynamic pricing based on the individual circumstances of the customer, in addition to traditional rating factors such as postcode and vehicle type. Read complete article here: Ageas to offer dynamic pricing on commercial vehicles.

Lannett (LCI) Completes Voluntary Strategic Review – Affirms Acting in Compliance on Digoxin Pricing | Street Insider

According to the subpoena, the Connecticut Attorney General is investigating whether anyone engaged in any activities that resulted in (a) fixing, maintaining or controlling prices of digoxin or (b) allocating and dividing customers or territories relating to the sale of digoxin in violation of Connecticut antitrust law. “We have and will continue to fully cooperate […]

Unidentified shipping firms agreed to refrain from undercutting each other’s prices and not compete for certain customers on certain routes | Supply & Demand Chain Executive

A major Japanese shipping company agreed Friday to pay the United States a $67.7 million criminal fine for conspiring to fix prices for international ocean shipments of cars, trucks and other wheeled vehicles at the Port of Baltimore and other locations, the Justice Department said. Kawasaki Kisen Kaisha Ltd., also known as “K” Line conspired […]

 

Events & Resources

 

Events

Seminar: Strategic Pricing Executive Overview | SPA

When: October 8, 2014 | 3:00 – 6:00 pm Where: Houston, TX at the George Bush Intercontinental Airport Marriott Learn how leading manufacturing and distribution executives have unlocked the keys to faster growth, stronger customer relationships, and market-leading profitability with SPA’s proven strategic pricing processes and technology. Event Overview Equal parts strategy and practical tactics, this complimentary […]

Webcast: Learn How IPS Corporation Uses Strategic Pricing Tools to Track Sales Force Accountability | SPA

Tuesday, October 14, 2014 2:00 PM Eastern Register to attend our webcast that starts at 2:00 PM EST where Nick Cassella, President of IPS Corporation’s Plumbing Group will share their journey to pricing excellence and how they are leveraging strategic pricing tools to track sales force accountability. To implement a solution that enhanced profitability, developed […]

Seminar: Strategic Pricing Seminar | SPA

When: November 7, 2014 Where: Chicago, IL at the Hyatt Regency O’Hare Learn how leading manufacturing and distribution executives have unlocked the keys to faster growth, stronger customer relationships, and market-leading profitability with SPA’s proven strategic pricing processes and technology. Event Overview Equal parts strategy and practical tactics, this complimentary Strategic Pricing Executive Overview event at the Hyatt […]

Seminar: The Value-based Pricing of Innovation | Stage-Gate International

When: April 14-15, 2015 Where: Washington DC Early Bird Price: $1495 US Are you capturing the value of your innovation? Firms are pouring billions in innovation investments every year with the goal of creating differentiation and competitive products and services. Many, however, forget two critical elements in the innovation management process: the clear definition and measurement of […]

 

Pricer’s Points Blogs

Pricer’s Points: When pricing is annoying | Jesper Hansson – CPP

It is funny how, when you work as a pricing practitioner, you seem to catch almost all details of pricing. When you get an offer, you study the pricing very carefully and you take your time to try to understand what the thought process behind it has been. On a weekly basis, I see loads […]

Pricer’s Points: Not identifying the obvious | Ben Blaney

I have gout. It’s familial gout, so it’s not caused by an extravagance of port and stilton (though I am partial to both). When I go to the doctor for a prescription, it’s usually a ludicrous charade, where I say “I have gout, my dad has gout, my brothers have gout, my grandfather had gout, […]

Pricer’s Points: How to Transition Your Organization From “Gut” Pricing to Data-Driven Pricing | Marc Folch

As the competitive landscape evolves and the pace of pricing change accelerates, data-driven approaches are increasingly becoming a requirement to stay competitive. One of the most important things to remember is that data-driven pricing does not necessarily replace good gut instinct. When implemented properly, data supports, informs and improves those instincts by providing better information […]

 

Top Discussions

Discussion: The Price War Over The Cloud Has High Stakes For The Internet

NPR Article This week, our tech reporting team is exploring cloud computing — the big business of providing computing power and data storage that companies need, but which happens out of sight, as if it’s “in the cloud.” It’s a timely topic, since there’s a price war going on as tech titans aim to control the cloud market. Amazon […]

Discussion: A common denominator for pricing and negotiating Business Intelligence (BI) and Analytics software

Forrester Blog BI and analytics software packaging and pricing are a Wild West with few common practices among the vendors. Comparing and contrasting vendor prices and negotiating with vendors is challenging because Few vendors publish list prices, so when a vendor tells you you are getting a certain discount you can’t really verify whether the discount numbers are […]

Discussion: Moore’s law gives way to Bezos’s law

GIGAOM Article Cloud providers Google, AmazonWeb Services (AWS) and Microsoft are doing some spring-cleaning, and it’s out with the old, in with the new when it comes to pricing services. The latest cuts make it clear there’s a new business model driving cloud that is every bit as exponential in growth — with order of […]

 

Books

Pricing on Purpose – Creating & Capturing Value

Summary: The book presents the theory of value— long established in economics—and details how any business can use various pricing strategies to create, communicate, and capture the value of their products and services. It takes a new approach of focusing on the external value as perceived by the customer and advocates matching price to value. […]

Pricing Perspectives – Marketing & Management Implications of New Theories and Applications

Summary: The world of pricing has been changing at a fast pace. There has been a development of new dynamic pricing strategies, and explosion of new pricing tools and techniques, and a focus on smarter buyers. The implementation of value-based pricing strategies that occurred in the last few years are indicitive of these changes. This […]

Pricing Segmentation & Analytics

Summary: Pricing analytics uses historical sales data with mathematical optimization to set and update prices offered through various channels in order to maximize profit. A familiar example is the passenger airline industry, where a carrier may sell seats on the same flight at many different prices. Pricing analytics practices have transformed the transportation and hospitality […]

 

Cartoons

One should always take a little time out to enjoy the lighter side of their profession. Enjoy the following sample from our collection of our favorite pricing related cartoons

Price Transparency

 

Quotes

One should always take a little time out to enjoy the lighter side of their profession. Enjoy the following sample from our collection of our favorite pricing related quotes.

“The bitterness of poor quality remains long after the sweetness of low price is forgotten”

     – Benjamin Franklin

“You can determine the strength of a business over time by the amount of agony they go through in raising prices.”

     – Warren Buffett

 

Other Resources

Report: The New Benchmarks for Pricing Excellence | PricingBrew

Intense Pressure Is the New Normal Most B2B companies are reporting that pricing pressure is on the rise… and it’s only going to get worse. While the economy continues to suffer from uncertainty about the future, there are two trends that leave little doubt…   Falling Behind is Just Not An Option In today’s climate, […]

Paper: Making Money by Giving It for Free – Radiohead’s Pre-Release Strategy for In Rainbows | Harvard Kennedy School

Abstract In 2007 a prominent British alternative-rock band, Radiohead, pre-released its album In Rainbows online, and asked their fans to “pick-their-own-price” (PYOP) for the digital download. The offer was available for three months, after which the band released and commercialized the album, both digitally and in CD. In this paper, we use weekly music sales […]

Training: Online Courses | Stephan Liozu

Please find below the links to several online courses prepared for Professional Pricing Society as well as free-of-charge webinars on the themes of value and pricing. SAMA: Value Quantification in Strategic Account Management (Registration Required) – 2013 SAMA: Value Quantification – Working on Economic Value Estimation (Registration Required) – 2013 Pros Pricing: is it Time […]\

Pricing Books and E-books

As a service to pricing professionals, we have compiled a collection of over 75 of the best pricing focused hard-copy books and e-books available. The entries for each book are tagged by subject matter, include the author(s), publisher, date of publication, a picture of the front cover, and a brief summary.

Pricing Tech

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Pricing Experts

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Pricing News LinkedIn Group

Join 1,000’s of your peers in the our LinkedIn discussion group. The group offers a place to share the latest pricing strategy and technology, news, events, resources, thought leadership, and discuss the latest pricing related successes and failures in the news.

The PricingBrew Journal

Whether you’re in sales, marketing, product management or a pricing professional, it’s important to stay up-to-date on the latest practices and research in B2B pricing—and get fresh perspectives and ideas that can help make your business (and career) more profitable.

The PricingBrew Journal is the only publication of its kind, providing a regular dose of real-world experience and insight from the PricingBrew research team and a global network of seasoned B2B pricing professionals and consultants. Every two weeks, subscribers get access to in-depth articles, training, research, best practices, case studies, expert interviews and educational webinars.

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About Pricing News

Pricing News is a sponsor supported organization dedicated to providing free high-value resources to pricing professionals. It is the source for daily and weekly digests of pricing strategy and industry newsevents, thought leadership articlesblogsreportsacademic research, and other resources and special offers. We also share highlights from top pricing discussions and publish articles from pricing practitioners in our Pricer’s Points blog series.

Join the Pricing News LinkedIn group and learn from your pricing peers and industry thought leaders or get your Pricing News on Twitter or Google+.

Until next week,

Matt Balfour

Founder & Managing Director of Pricing News

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