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This Week in Pricing > 7/19/14

TWIP is a recap of the week’s top pricing strategy in the news and resources for pricing professionals. We also publish a daily digest of top pricing news, strategy expert and technology leader’s thought leadership and industry news and events.

EditionSponsor-ValueInnoruptionAdvisors

This Edition is Sponsored by:

Value Innoruption Advisors

Founded by Dr. Stephan Liozu, Value Innoruption Advisors provides training and consulting resources for organizations interested in embedding value-based methodologies in their go-to-market strategies related to innovation, marketing, pricing, and sales. Value Innoruption Advisors offers two popular value and pricing management certification programs – Customer Value Modelers™ (CVM™) and Change Agent in Pricing™ (CAP™).

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The Past Week’s Top Pricing Related Headlines

How Customers Can Improve Your Pricing | Inc.com

No one is suggesting customers should be the primary voice in your pricing decisions. But you can still benefit from involving customers in the process, note Marco Bertini and Oded Koenigsberg in the MIT Sloan Management Review. “If you sense that your company is leaving good money on the table and struggling to convert product differentiation into revenue and […]

What You Absolutely Cannot Afford to Forget When Pricing Your Products | Bplans

When it comes to finding the right price for your product or service, there is no formula and no single correct answer. Even within the same industry, what works for one company won’t necessarily work for the next. Today, a Google search for the term “pricing products” returns 297,000,000 results, almost double the results of […]

10 tips to better pricing for manufacturers | ReliablePlant.com

Pricing is one of the most powerful – yet underutilized – strategies available to businesses. A McKinsey & Company study of the Global 1200 found that if companies increased prices by just 1 percent, and demand remained constant, on average operating profits would increase by 11 percent. Using a 1 percent increase in price, some […]

The Benefits of Bargaining with Your Customers | Harvard Business Review

When I asked for the price of the first coat that I tried on, Ahmed quoted about 2,000 euros but he also said that he would give me a good discount. After trying 15 plus different models, I realized that I loved a black coat that looked like the one worn by the characters in […]

Why discounting can put your customers’ loyalty at risk | Marketing Magazine

As supermarkets and retailers fight to offer the lowest prices, Jan-Pieter Lips, EMEA president at Aimia – the company behind Nectar – discusses the history of loyalty schemes and what loyalty might mean in the future. Loyalty programmes date back to 1793, when a US merchant began giving out copper tokens that could be exchanged […]

Breaking Down Your Competitor’s Pricing Model | OpenView Labs

Breaking down your competitor’s pricing model can offer valuable insights when it comes to changing your own pricing strategy. The best part? It’s actually easier than it sounds. A good place to start when contemplating a pricing strategy change is looking at how your direct and indirect competitors price their products. Knowing about other pricing models […]

SaaS Pricing Considerations | OpenView Labs

SaaS pricing is complicated. Before you make a decision you need to consider all the angles and keep in mind it’s perhaps the single most important decision a young company can make (no pressure). Pricing out a B2B SaaS product is a complicated decision. For starters, it involves a larger number of moving parts than […]

Justice Department Investigates Possible Pricing Coordination in Music Publishing | WSJ

The Justice Department is investigating possible pricing coordination among music publishing companies as it reviews the decades-old rules that govern the cost of licensing songs, according to people familiar with the matter. The Justice Department recently sent out requests for documents from Sony Corp.’s Sony/ATV Music Publishing and Vivendi SA’s Universal Music Publishing, along with […]

Pricing Pitfalls And The Professional Buyer | PYMNTS.com

Pricing Is The Pain Point Across the board, complexity was a central concern of B2B buyers—98 percent reported it in some form or other– and those concerns across a spanned across issue. Of particularly concern were navigating web procurement portals-which unlike their B2C counter-parts are not designed as acutely with user experience in mind, thus […]

Selling Prices | Business Insider

From the latest NFIB Small Business optimism index, a look at the number of small businesses that are raising prices and increasing compensation. The index was briefly higher in 2010, coming out of the crash, but besides that this is the highest level of companies with a planned price increase. Read complete article here: Selling […]

3 Strategies for Raising Your Prices | Entrepreneur.com

Of the 28 million small businesses in America, 21 million lose money. Why do so many people lose at the game of business? The number one reason businesses fail is, simply, their prices are too low. They don’t sell their products at prices high enough, then they operate on margins so small they are unable […]

How To Profit From Selling Digital Products (Part 1) | Smashing Magazine

Value-Based Pricing How much is a book worth? The most common way to answer that question is by comparison. Print books often retail for $20, but Amazon will sell a copy discounted down to $14. Mine are just digital, so we should probably knock at least $6 or $7 off because ebooks aren’t worth as […]

Why the Cost of Spotify and Other Music Streaming Services Must Increase | Motley Fool

Consumers clearly like streaming music, as it offers them an unlimited selection at a very low price — Spotify charges $9.99 for its all-you-can-listen service that allows on-demand access to the millions of songs in its library. The challenge is that if physical and digital sales go away, artists have no reason to keep giving […]

Regulation Is Hurting Cabs and Helping Uber | Harvard Business Review

Uber and fellow ride sharing services (such as Lyft and Sidecar) can easily advertise big discounts and regulation-laden taxis are unable to respond. Conversely, during peak times, Uber can dynamically raise its prices while taxis are tied to the same static one-size-fits-all rates. Uber is further capitalizing on this uneven pricing field by running sales […]

Uber’s Travis Kalanick Explains His Pricing Experiment | NYTimes

Of the several entrepreneurs who are trying to shake up urban transportation, Travis Kalanick of the smartphone-summoned car service Uber has made some of the boldest moves. In my article about the strategic battle between Uber and its rivals, Mr. Kalanick explains that he sees the 20 to 25 percent sharp price cuts announced this […]

Uber Makes Economists Sad | Bloomberg View

New York just killed every economist’s favorite thing about Uber: surge pricing. Sure, many economists also love convenient car service at the touch of a button. But black-car services have been around for a long time. Explicit surge pricing — which both creates new supply and rations demand — has not, but it’s long been a core […]

Why Budget Airlines Could Soon Charge You to Use the Bathroom | FiveThirtyEight

An urban legend in the airline industry claims that the former CEO of American Airlines, Bob Crandall, once saved his company $100,000 a year by calling for the removal of a single olive from every in-flight salad.1 As the story goes, some of these savings came from lower fuel burn thanks to fewer olives, and thus a […]

Is Southwest Airlines’ marketing strategy putting passengers in danger? | The Business Journals

Southwest Airlines knows it can’t compete with other airlines on high-class service and doesn’t try. Instead, it’s known for keeping costs down with its no-thrills service but still understands that the definition of brand value is no longer just about price. It’s actually the sum of your functional, emotional and participative benefits divided by price. Uniqueness […]

We all pay for $1,000 a pill drug | CNN

Sovaldi, the brand name for sofosbuvir, holds remarkable promise. But the manufacturer of this drug, Gilead Sciences, has created an enormous obstacle that is straining our health care system: its eye-popping price. At $1,000 per pill, Sovaldi costs $84,000 for a single course of treatment, and well over $100,000 when combined with other medications, as is generally […]

How Inequality Is Hurting Whole Foods | Huffington Post

At the same time, retailers that cater to price-conscious customers — the middle- and lower-income shoppers who have been squeezed by flat wage growth and a flagging economy — are thriving. Discount grocers like Aldi and Save-a-Lot proliferated during the recovery. Barring a middle-class revival, upper-crust grocers like Whole Foods could have a harder time […]

Morrisons Admits Own Label More Expensive than Leading Discounters | BrandView

According to a recent company press release, Morrisons has acknowledged that its own label products are as much as 20 percent more expensive than the leading discounters and that it needs to narrow the gap in order to win back customers. Brand View have investigated products stocked across Morrisons Online, Aldi and Lidl. Out of 59 […]

Zurich prices had been out of step with rivals | FTAdviser.com

“Zurich is coming into line with our pricing structure. “Our pricing structure is not under review at the moment since we completed the cycle of pricing changes at the end of last year.” Axa Wealth said they have no further plans to change their pricing structure following the changes they made at the end of […]

Recommended Resources

Pricer’s Points Blogs

The Case for Logarithms | Joe Brillantes

The graphs below present the same data. The difference is the axis for quantity of the bottom graph is in natural logarithmic scale. Transforming data to their logarithms most often decreases variability, enables visualization, and linearizes the relationship between two variables. In the top graph, there seems to be three “outliers”, but when the quantity […]

The “68% off” story: Part I | Susan Lee

Deep discounts are everywhere. As a consumer, I love it. As a former sales rep, I get it. As a pricing specialist, I hate it. Here is a real-life story to illustrate how companies are leaving a lot of money on the table with aggressive discounting: Yesterday I bought my favorite ground coffee at a local supermarket at […]

Price pressure and the hunt for profit is killing China’s Pearl River | Jesper Hansson

Some of you might have seen a post I made some weeks back. I was walking through a Giant Supermarket in Singapore and was amazed to see men’s denim jeans on sale at just SGD 3 (USD 2.40) per pair. As a consumer and at first glance, it would be an amazing opportunity to get […]

Top Discussions

Discussion: The Power of Pricing: How to Improve Your Pricing and Profits

Vistage Executive Street Blog Your sales team defines price as what’s on the invoice. Your CFO defines price as ‘what we take to the bank’. Your customer says price is too high. Your pricing manager says that price doesn’t match our standard terms. Your distributor says they can’t make any money on your line. And […]

Discussion: Uber CEO Explains The Company’s Taxi-Killing Pricing Formula

Business Insider Article When was the last time you saw a pricing strategy completely alter an industry? Uber is upending 2 segments – the black car and taxi of the transportation industry. An innovative way to order and bill car service. Top Comments Scott Francis President, Strategic Pricing Solutions Uber is providing some interesting tests. […]

Discussion: What Happens When You Lower Your Prices?

Pricing News LinkedIn Discussion Group Discussion Besides this immediate, leveraged impact that a price cut has on profitability, proper pricing is also essential for any salesperson looking beyond just this quarter’s quota. A price cut may help close business today, but it only makes future sales even harder, because of the effect it has on […]

Discussion: We raised prices to preserve our business model

Iterative Path Blog This quote comes to us from Ms. Allie Webb, the Founder and CEO of Drybar a blow dry only salon. A blow dry salon is not like any hair salon. It offers, just as name indicates, blow dry and styling. Drybar is a pioneer in this niche and does $40 million in […]

Discussion: Google Is Working On Airfare Price Comparison Tool That Will Blow Everyone Out Of That Water

Business Insider Article The company has shared its pricing information with the company, which is developing a service that will display fares without bias and then direct customers to third party sites where they can buy tickets. “Google will say, ‘Here are the fares,’ then you click straight through to Ryanair or someone else. It […]

Books

Book: Innovation in Pricing

Summary: Pricing has a substantial and immediate impact on profitability. Most companies, however, still use costs or competition as a main basis for setting prices. Product or business model innovation has a high priority for many companies whereas innovation in pricing has received scant attention. This book examines how innovation in pricing can drive profits. […]

Book: The Definitive Guide For Better Pricing

Summary: Give your business a competitive boost by optimizing your pricing strategy. By focusing on four key areas, you can make sure that your sales team is selling on value and not depending on discounting to close deals. In this informative new eBook, you’ll learn how to: Identify opportunities for new customer acquisition Segment your […]

Book: ROI of Pricing

Summary: As with executives and managers in so many other business functions, pricing specialists are being challenged more and more to substantiate the added value of their activities. Pricing is a core function of every business, and needs not only to contribute positively to short- and long-term results, but also to document its impact to […]

Cartoons

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

Price Transparency

Pricing Language

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

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

     – Katharine Paine

Other Resources

Report: Simon-Kucher & Partners’ Global Pricing Study 2012

Global Pricing Study 2012: Pricing power drives higher profits when top management takes an active leadership role in pricing and puts a pricing organization in place, a worldwide study by Simon-Kucher & Partners reveals.

Pricing pressure in the Asia-Pacific region is increasing while economic growth rates are slowing down. A strong commitment from top management to pricing – combined with a dedicated pricing organization – is essential to protect and boost profits in today’s slow-growth economic climate. This is the key insight from Simon-Kucher & Partners Global Pricing Study 2012*, an in-depth survey of over 2,700 executives and managers from China, Singapore, Malaysia and almost 50 other countries in Asia, the US and Europe.

Report: Gartner, MarketScope for Price Optimization and Management Software for B2B: 2013

The 2013 MarketScope for PO&M helps clients evaluate vendor software and service offerings, as well as align their price management strategies with the major trends affecting pricing professionals. The findings in the MarketScope are based on primary research conducted by Gartner, client interactions and inquiries on the multiple considerations that are part of developing a PO&M strategy, and Gartner research in technology and business adjacent to price management.

VIDEO SALES TIP – Your View of Profit is All Wrong! | The Sales Hunter

Too many salespeople and companies look at profit the wrong way! I meet so many people who think if they can just get the sale — even at a discount — then they will eventually make up profit in the long run.  But quantity of sales won’t ever make up for quality of sales! You […]

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.

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Until next week,

Matt Balfour

Founder & Managing Director of Pricing News

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