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This Week in Pricing > 12/21/14

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.

EditionSponsor-StrategicPricingSolutions

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Strategic Pricing Solutions

Strategic Pricing Solutions, LLC (SPS) is a management consulting firm helping clients with pricing strategies, data analytics, and pricing processes. SPS was formed by Scott Francis in 2005 with a vision of enabling B2B clients to build sustainable strategic pricing capability to significantly improve their profitability. By providing flexibility in how we serve our customers, SPS consulting enables clients to build sustainable strategic pricing capability and continuous improvement in profitability through better pricing decisions.

Click a link below to learn more…

 

Headlines

Desperate Retailers Are Discounting More Than Ever | Business Insider

Amarilis Sinchi visited Macy’s at a New Jersey mall on Black Friday, but she waited until this week to purchase the red fleece pajamas she had her eye on. The 21-year-old student ended up paying $US13 at the department store, down from $US30 on Friday, which has traditionally been the best day for deals during […]

How Your Sales Presentation is Stopping You From Selling at a Higher Price | The Sales Hunter

One of the reasons salespeople don’t get the price they want or are pushed to offer a discount to close a sale is due to their value proposition. Too many salespeople use a single value proposition. They do so because they’ve had success with it and they’re comfortable with it. In my mind, the reason […]

Will I Sell Less if I Raise My Prices? My Answer Will Surprise You. | The Sales Hunter

The reason is simple — it’s not the amount you sell that matters; it’s the amount you make that counts. Selling huge sums at breakeven isn’t going to get you very far at all.  Conversely, not selling anything at a huge margin isn’t going to work either. The solution lies in creating a value proposition […]

Deconstructing the Price Tag | HBS Working Knowledge

A new study by Bhavya Mohan, Ryan Buell, and Leslie John has an important conclusion for retailers: Explaining what it costs to produce a product can potentially increase its sales. When a company sets a price for a product, shoppers typically have no idea what it costs to produce that item. But it turns out that consumers reward […]

Different prices found for same product on separate devices | KPRC Houston

Doing a search on HomeDepot.com averages $120 per item on desktops. But the same search on an iPhone or Android comes up with $230 per item. And get this — a mobile device only shows you 24 items to choose from. That search on a desktop will show 48 items. “They appear to have a […]

The Lesson in American Airlines’ Smart Pricing Plan for its Exclusive Club | Entrepreneur

Pricing is psychological. There are two types of customers in this world, or at least in my world: the ones who can’t commit (pay as they go) and the ones who can commit (subscribers). Businesses hate the pay-as-you-go types and love the subscribers. Just look at the numbers. I’ll probably visit the Admirals Club about […]

How to Find Out What Customers Will Pay | Harvard Business Review

It’s one of the most fundamental decisions that every business must make: What price should I charge? The right answer to that question is a company should charge “what the market will bear” — in other words, the highest price that customers will pay. Unfortunately, few companies use this approach. Instead, prices are usually set […]

Gold, Music and the Irrationality of Price | The Adaptive Marketer

What would happen if you doubled the price of your products? How about if you increased them five-fold? Would customers still buy them? This post tells the story of a company that did just that – by accident. My friend Sean was working at Open Labs, a company in Austin which provided keyboards to studios […]

Fuel prices and airfares – Airlines are making record profits. Don’t bet on them passing any of that money along to you. | Slate

Americans making the drive to grandma’s house this Christmas will arrive with a little more cash in their wallets than they might have expected. Those traveling by air won’t be so lucky. The average price for a gallon of unleaded gasoline was hovering around $2.50 on Wednesday, down roughly 22 percent from this time last […]

Can flat-rate pricing help control cancer costs? | CBS News

So, what happens if the cost of treatment exceeds the bundled payment? The annual payment won’t increase if complications increase treatment costs. Eight bundles are available for patients, depending on what services they need, the insurer said. “The bundled payments (there is a total of 8) cover all services and care provided by MD Anderson […]

Apparel makers should go for a new pricing model | The Daily Star

Chief executive of Norway-based Sustainable Trade says it will benefit all in the supply chain Winum in her study “suppliers speak up” said labour costs are always an element in the price quotation of products, but it is difficult to know whether these costs are visible. She prepared a guideline based partly on the voices […]

Amazon sellers hit by nightmare before Christmas as glitch cuts prices to 1p | The Guardian

Sellers rounded on RepricerExpress, whose website boasts that it provides “the ridiculously simple way to increase your Amazon holiday sales”. Stuart Cameron said on RepricerExpress’s web forum that his entire inventory had been sold for 1p in less than two hours. “Heads are going to roll,” he wrote. “Solicitor first thing Monday morning. This has […]

Jeff Bezos’ Lemonade Stand | NYTimes.com

Sales boomed. “It’s Adam Smith economics that volume will go up when prices go down,” Amazon’s chief executive, Jeff Bezos, explained to The New York Times in January 2002. Mr. Bezos added that Amazon, which was then offering free shipping on orders over $99, would continue to cut prices as its efficiency increased. That year, Amazon […]

Here’s Why Amazon’s Profitability Is So Low (Part 1 of 2) | Forbes

Why Are Amazon’s Operating Margins So Low? Low Pricing Strategy, Owned-Inventory Business Model, Investments In Various Strategies Keep The Margins Low Though Amazon’s operating margin was over 4% in 2008 and 2009, it has fallen to around 1% during the last two years, and it is expected to drop down even further in 2014. It’s […]

Price transparency is dangerous | Pierhouse

Price transparency has become the new norm. It’s easy for shoppers to get information on the best prices from dozens of different sources without visiting lots of stores.  To counter this movement retailers now have tools to change prices very quickly. Shoppers vs Retailers – guess who wins One result of using these tools is […]

Are Face Value Tickets a Thing of the Past? | Una Tickets

Dynamic pricing is a pricing strategy in which businesses set highly flexible prices for products and services based on current market demands. The travel industry is a prime example of dynamic pricing where getting the lowest airfare often comes down to a combination of buying tickets on the correct day of the week, at the right […]

Uber Offers Free Rides During Sydney Hostage Crisis After Surge Pricing Backlash | TechCrunch

After prices spiked as high as four times the normal fare (with prices starting at about $100 AUD) during the ongoing Sydney hostage crisis, Uber has backed away from its surge pricing policy and is now offering free rides out of Sydney’s central business district (CBD). Uber’s surge pricing feature kicks in during times of […]

Judge Rules Drug Maker Can’t Shelve Old Pill | NYTimes.com

A federal judge has decided to block for now an attempt by the drug company Actavis to halt sales of an older form of its Alzheimer’s disease drug Namenda in favor of a newer version with a longer patent life. The decision, issued Thursday, represents a victory for New York’s attorney general, who had filed […]

Watchdog – Allstate Auto Insurance Pricing Scheme Is Unfair | DailyFinance

“This is a watershed moment in the history of insurance consumer protection,” J. Robert Hunter, CFA’s Director of Insurance and the former Texas Insurance Commissioner, said in a statement. “If regulators don’t block this scheme immediately, American consumers will pay a huge price. While we are forced by law to buy these companies’ insurance products […]

Pricing wars – desperation in the morning? | Billing Views

The gloomy outlook in the US stems from the amount and cost of data traffic, which is already a commodity. Although the carriers that have launched innovations such as shared data plans are seeing reduced churn, churn is still up on last year. The answer, as we know, lies in collaboration. Collaboration gives operators the path […]

Price discrimination? Feds want to force companies to explain pricing strategies | CTV Kitchener News

TORONTO — Companies would be forced to justify why their prices are higher in Canada than in the United States or face naming and shaming under federal legislation introduced Tuesday — a move some critics called misguided. Industry Minister James Moore said the aim is to protect Canadian consumers, not regulate prices. “This unexplained difference […]

How U.S. price envy makes us forget economic facts | The Globe and Mail

Back in 1974, when the federal opposition offered price controls as a way of addressing inflation, prime minister Pierre Trudeau’s response was sarcastic: “Zap, you’re frozen.” While he followed through on just such legislation nonetheless, the government’s new Bill C-49, the Price Transparency Act, to amend the Competition Act, is not so overbearing – it […]

Tories target cross-border price gap with Competition Bureau bill | The Globe and Mail

This country’s competition watchdog will be granted new powers to compel testimony from executives at Canadian affiliates of foreign companies as part of the Conservative government’s push to narrow the price gap between goods sold in Canada and the United States. Industry Minister James Moore announced details of legislation Tuesday giving the Commissioner of Competition, […]

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Events

Conference: Strategic Pricing Conference | SPA

When: January 15-16, 2015

Where: Ft. Lauderdale, FL at the Ritz Carlton

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 Ritz […]

Webcast: Increasing Margins with Proven Pricing Tools | SPA

When: Tuesday, January 21, 2015 2:00 PM Eastern

Register to attend our webcast 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 pricing discipline, and removed emotion from […]

Webcast: Learn How Iowa Fluid Power Improves Price Realization with SPA | SPA

When: Tuesday, February 18, 2015 2:00 PM

Eastern Register to attend our webcast where Jim Kaas, President of Iowa Fluid Power, will share their journey to pricing excellence and how they are leveraging science-based strategic pricing tools to improve price realization by identifying price-sensitive products and services. To implement a solution that enhanced profitability, developed pricing […]

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 […]

Conference: Manufacturing Pricing Excellence – Barcelona 2015

When: May 20-22, 2015

Where: Barcelona, Spain

Event Overview On behalf of Copperberg and the entire Pricing competence team I am delighted to announce our 3rd Annual Manufacturing Pricing Excellence conference scheduled for 20-22nd of May 2015 in Barcelona, Spain. Since our last edition in Amsterdam, together with our advisory board and delegate network we have been […]

 

Resources

Pricer’s Points Blogs

Pricer’s Points: Rules When Online Shopping Fails | Rocky D’Adamo

For the last 8 years my Christmas shopping has been a breeze. I always received great deals and was pretty much finished in 1 day. This is shocking and envious for some. My parents always had a bad habit of waiting until the week before Christmas to out to Woodfield Mall and fight a crowd […]

Pricer’s Points: Boost your Profits with a Submarine Warrior’s Lesson | David Mok

The U.S. Navy’s nuclear submarine is one of the most modern, efficient and effective weapons in the military arsenal. Submarines are the cornerstone of the Navy’s conflict avoidance and resolution. Attack submarines or hunter-killers, which I served on, are specifically designed for the purpose of attacking and sinking other submarines, surface combatants and merchant vessels. Furthermore, […]

Pricer’s Points: The 5 biggest challenges in pricing in Asia | Jesper Hansson – CPP

I was part of a discussion recently about where I see the biggest current challenges in pricing in Asia and it inspired me to share my views with you in this blog. When it comes to developing powerful pricing strategies and well-oiled pricing departments, Asia is still behind both North America and Europe. There is […]

 

Top Discussions

Discussion: The 5 biggest challenges in pricing in Asia

I was part of a discussion recently about where I see the biggest current challenges in pricing in Asia and it inspired me to share my views with you in this blog. When it comes to developing powerful pricing strategies and well-oiled pricing departments, Asia is still behind both North America and Europe. There is […]

Discussion: 9 Ways Your Pricing Strategy Sucks

Why do I want to talk about pricing? There is a disease called “Price Discounting.” It is like heroin. It will kill you and your business. Let me give you an example to explain this: You make a 40% gross margin. You decide one day to reduce your prices by 6%. That means that you […]

Discussion: Netflix CFO – We Still Have Pricing Power

Undeterred by soft domestic subscriber growth due in part to a $1 price hike enacted at the end of the second quarter, Netflix remains bullish on its ability to raise prices and lure domestic subscribers, CFO David Wells told an investor group. Netflix is also planning to launch service in six or more new countries […]

 

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.

The Price Advantage (Second Edition)

Summary: A comprehensive look at creating pricing strategies that work in both good economic times and bad Written by three preeminent pricing experts at McKinsey & Company, the Second Edition of The Price Advantage is a practical pricing guide for the executive or pricing practitioner who wants to identify, capture, and sustain substantial pricing gains […]

The Price Advantage – Workbook

Summary: Pricing–for any company in any industry–is far and away the most sensitive profit lever available. Still, few companies or managers execute pricing well, and most regularly miss valuable opportunities. Whether testing the techniques and knowledge gained from reading The Price Advantage or supplementing personal knowledge in the field, this companion workbook is essential. The […]

The Price is Wrong – Understanding What Makes a Price Seem Fair & the True Cost of Unfair Pricing

Summary: Fair pricing is an issue that affects us all, whether we’re consumers or merchants. Throughout her career, Sarah Maxwell has seen how pricing practices across a variety of different areas, from mobile phones and airline tickets to prescription drugs and gasoline impact our everyday lives. Now, with The Price Is Wrong, Maxwell shares her […]

 

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 Wars

 

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.

“Nowadays people know the price of everything and the value of nothing.”

     – Oscar Wilde

“The moment you make a mistake in pricing, you’re eating into your reputation or your profits.”

     – Katharine Paine

 

Other Resources

Pricing Resources

The source for valuable pricing resources including: academic programs, articles, blogs, books, cartoons, certifications, papers, quotes, reports, training, and videos.

Pricing Certifications

The source for top formal pricing certification programs.

Pricing Training

The source for top formal pricing training programs and service providers.

Pricing Videos

Enjoy our collection of our favorite pricing related videos and share your favorites with us and we will add them to the collection.

Pricing Tech

The source for pricing technology vendor related information and resources.

Pricing Experts

The source for pricing strategy expert vendor related information and resources.

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.

 

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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