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This Week in Pricing > 8/16/14

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

Price Is Not Just A Strategy, It’s A Story | The Story of Telling

Pricing is not logical. Neither is how we attribute value in a marketplace. All retailers have a pricing strategy that customers come to understand and each one is different. I know that I will pay a firm, premium price for Dior. I understand that the price of a cup of coffee at my local cafe […]

Pricing Strategy – 4 tips from Lil Jon & 2000s hip-hop | Big Commerce

Lil Jon, one of hip hop’s most accomplished artists, is a musical success story. Hit after hit, he gets the party jumping. But did you know he’s also an ecommerce pricing genius?  In fact, if you listen to hip-hop tracks of the 2000s, you’ll find a crazy amount of pricing strategy. Turn Down for What? In […]

Are You Pricing Your Time or Your Worth? | Project Eve

This is a typical example of marketing pricing instead of value. This client was hard-working, knowledgeable, and had rave reviews from customers. He was successful in every area, except the financial area. Pricing Your Time AND Your Worth The client charged by the hour. When marketing himself and quoting prices, he was only considering the time […]

How to experiment with value pricing | FreshBooks

It was only after having that conversation time and time again when I realized that pricing is in fact a skill just as much as my debits and credits were. If I became a good accountant through my years of experience, I’d need to do the same to become good pricing. If you’ve ever thought, […]

Pricing – Seven things to consider | Flying Solo

The right cost model can keep your business afloat and your customers happy. Consider these points when setting your price. I have seen a number of micro business owners improve their profitability and longevity by taking the time to get their price right. It may take more than one attempt to find a pricing model that best […]

Time CEO testing higher prices for People in wealthy areas | New York Post

“I agree that there’s not a good reason for the price to be the same in Arkansas as it is in Connecticut,” said John Harrington, a circulation expert who publishes “The New Single Copy.” Ripp might want to go even further and try different prices in different types of retailers — say higher in airport […]

Game Changer – Tips For Creating A Pricing Strategy | Associations Now

Quick example: Video streaming and rental company Netflix whose stock fell almost $200 over the course of a few months after increasing the prices of its streaming service several years ago to cover the cost of higher licensing fees. If the company had taken Mohammed’s advice and, instead of unilaterally raising costs for existing customers, […]

First Insight CEO Petro – Invest in Companies That Know How to Price Their Products | Newsmax

According to Buffett, “the single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business.” But companies apparently aren’t devoting adequate attention to the issue, Petro, a former merchandising representative, writes in an article for […]

Japan firms finally get pricing power just as economic growth sputters | Reuters

Early signs indicate that price rises and expectations of further inflation are building as a labor shortage and Abe’s stimulus policies allow companies to charge customers more. … The promise of “Abenomics” has been that ultra-loose monetary policy and government spending would push up prices and company profits, in turn boosting wages and spending in […]

Law firm pricing officers improve profitability | The Global Legal Post

Three in four US law firms have a pricing professional in place. Furthermore, although the role is vaguely defined, pricing efforts increase profitability. However, comments from the research found that not only is there no job description for the role, pricing professionals are inventing the role as they go along. The proportion of large US law […]

Here’s An Easy Way To Get People To Pay You More | Business Insider

It’s easy: simply cut out extra zeros. Instead of charging an even $2,000, try asking for $2,108. “Pricing psychology shows that no matter how hard you’ve worked at arriving at your carefully calculated project rate, the first thing a client sees is the number of zeroes,” reports Meredith Lepore in a Skillcrush article on the topic. Restaurants, retail stores, […]

The unconventional pricing strategy that tripled my income | Jake Jorgovan

One of the biggest problems for creatives is figuring out how much do I charge? Often they end up charging basic hourly rates or trying to compare themselves to the rates of others. But here is the deal, there are no rules to pricing. In this post I am going to break down the traditional […]

Cheep Beer and the Psychology of PlayStation Now Pricing | The Psychology of Video Games

Psychologists studying consumer choice call this an “attraction effect.” It happens when one choice dominates another by being mostly similar to it, but better on at least one important aspect. The reason, as usual, is because of how our brains are wired. We simply aren’t very good at evaluating things in absolute terms, like the […]

On the money – Mondelez faces resistance to pricing | Just Food

Speaking to analysts during a conference call, Mondelez CEO Irene Rosenfeld said that the lackluster sales performance was the result of the group’s decision to “lead pricing” in order to “recover cost increases”. In particular, Mondelez said cocoa prices increased 20% year-on-year. Price hikes also reflected attempts to offset the negative impact of foreign exchange, […]

Russia to control food prices by retailers, suppliers after import ban | ITAR-TASS

Russian authorities will control food prices both by retailers and suppliers in an effort to prevent rapid price growth following a ban on produce from Western countries. … Medvedev instructed the government to start monitoring the commodity markets and price levels on a daily basis. Read complete article here: Russia to control food prices by […]

How Data Analytics Can Help In Better Pricing Decisions? | MyTechLogy

Selling is the only way a business can grow. When you talk about selling, pricing of the product or service is very important. Under price a product and you may incur loss, but if you over price the same product you will lose a significant number of customers (some loyal ones too). So, pricing strategy […]

Benefits Of Shifting To A Value-Based Business Pricing Management System | Top Hat Articles

Why should you price your products on the basis of your cost of production when your customers assess this factor on the basis of the value that your product or service offers? This paradox can have a huge impact on the overall profitability and sustainability of your business. A cost-centric approach will shift emphasis on […]

3M’s Intelligent Pricing Tool | GuruFocus.com

For the last three years 3M’s pricing has seen a consistent rise which clearly indicates that the company has a very strong market hold due to which it can steer the price upwards in an era when all other companies are looking into competitive pricing considering the competition in the market. Truly 3M has a […]

New Yield Management Tools, Commercial Gains Lift Avis Budget Pricing | Business Travel News

In addition to tight supply and solid demand, Nelson attributed pricing strength to new revenue management tools. The company has implemented “the first phase” of a new yield management system in 100 markets, enabling it “to be more nimble in these markets by being able to shift prices multiple times in the day, based on […]

Spirit Airlines takes first steps of ancillary dynamic pricing as supply growth continues unabated | CAPA

The airline during the past year has often referenced its intent to improve its revenue management of ancillary, non-ticket prices by implementing dynamic pricing based on peak travel demand periods. Mr Baldanza remarked that Spirit is not yet at a point where it can dynamically price carry-on and checked bags in the same manner as […]

Disney-Amazon Dispute Concerns More Than Pricing | WSJ

Price isn’t the only issue keeping “Maleficent” and “Captain America” off of Amazon.com Inc.’s virtual shelves. Walt Disney Co.’s dispute with the giant online retailer also encompasses promotion and product placement on the Amazon website, as well as questions over who makes up the difference when Amazon loses money to match the prices of competitors, […]

Amazon Blocks Disney DVD Orders as Pricing War With Hachette Rages On | Yahoo Finance

Following heated contract disputes this summer with media giants Hachette and Warner Brothers, Amazon has opened up a brand new front on its divisive pricing war: the Walt Disney Company. Amazon is not currently accepting preorders for certain Disney DVD and Blu-ray releases, including blockbusters like Captain America: The Winter Soldier and Maleficent. The move […]

Amazon demonstrates it misunderstands pricing | Business 2 Community

Price is about perception Once you start lowering prices your customers start to devalue what you sell. If you price something highly, people value it much more greatly and with higher value you generally get greater usage. If Amazon is really as keen on getting more people to read, as its emotionally-charged letter suggests, then […]

The best thing for books is more power to Amazon | Yahoo Finance

Amazon (AMZN) used to set the prices people paid for ebooks, but, thanks to an illegal price fixing conspiracy, they lost most of that power to publishers. Almost everyone — probably even the big publishers — would be better off if they got it back. Part of what’s made Amazon a success is its sophisticated […]

E-book pricing spat – Hachette CEO responds to Amazon letter | Digital Trends

Keen to put across its side of the story in the wake of Amazon’s weekend move urging readers to email the boss of US publishing giant Hachette to press for cheaper e-book pricing, CEO Michael Pietsch has composed a response that’s being sent out to those who contact him. In his 412-word message, Pietsch points […]

Is My $20 Book Worth $236? | Pragmatic Pricing

Last week, the least expensive paperback version of my book on Amazon was $236 even though the cover price is $20. Wow. The Kindle version was reasonably priced at $9.99. But $236? And it wasn’t just one company. There were multiple vendors offering my book in that price range. What happened? You may or may […]

Recommended Resources

Events

Webcast: Learn How Strategic Pricing Tools Can Help You Improve Sales Reps’ Confidence in Prices | SPA

Tuesday, August 19, 2014 2:00 PM Eastern Register to attend our webcast that starts at 2:00 PM EST where SPA Client Livingston & Haven will share their journey to pricing excellence and how they are leveraging science-based strategic pricing tools to increase prices and margins without losing sales. Bob Decker, Vice-President of Product & Technology, […]

Pricer’s Points Blogs

Pricer’s Points: A is for Attribute-based pricing | Ben Blaney

In attributes-based pricing, we’re trying to key in on essential pieces of meta-data – attributes – that will tell us something about the customer, the product, the geography, or the deal (or a whole bunch of other things) to help us price correctly. (you’ll notice I said “correctly”, not “ludicrously high”) First, let’s think about […]

Pricer’s Points: Why the Message of Pricing Hasn’t Spread Wider | David Mok

Pricing as a profession has come a long way – from a role that has evolved out of someone’s part-time job (marketing, finance, contracting, etc.), and that wasn’t long ago, to a full-time profession accompanied by a title having the word PRICING in it. I happen to be one of those fellows who has been a part of […]

Pricer’s Points: Why the Amazon Fire Phone price isn’t cheap. | Matt Burnett

It’s been about three-weeks since Amazon unveiled its first smartphone to the world: the Fire Phone. Now the dust has settled it’s possible to try and understand exactly what Amazon is trying to achieve with the Fire Phone pricing. Some commentators have criticised the company for not doing what it’s done in the past with the […]

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 […]

Discussion: Bed, Bath & Beyond Trumps Amazon! The Revenge of Old School Retail

Yahoo! Finance Article What’s exciting about Bed, Bath & Beyond is less about the company itself and more about what it says about the retail industry as a whole. They have taken the price wars a step further by compressing margins enough to beat Amazon without gimmicks. The company is seeing margins shrink as it […]

Discussion: Pricing discipline in a complex decentralized organization is a headache

Pricing Strategy & Optimization LinkedIn Group Discussion Local managers may disregard central pricing recommendations. Moreover they may give a lot of latitude to their salesforce. The end result is chaos and far from optimal. All comments welcome! inspire me… Top Comments Wendy Wise High Tech Marketing and Sales Strategist I hear you. Have been there […]

Books

Book: Guide to Contract Pricing – Cost &Price Analysis for Contractors, Subcontractors, & Government Agencies (5th edition)

Summary: This master reference in its fifth edition contains everything you need to know about government pricing rules and regulations in one easy-to-use volume. Guide to Contract Pricing: Cost and Price Analysis for Contractors, Subcontractors, and Government Agencies, 5th Edition, explains how the government conducts business and walks you through every step of the contracting […]

Book: Harvard Business Review on Pricing

Summary: Finding the right price for your product or service often feels more like an art than a science. Price a product too high and you may limit your market. Price too low and not only will you leave money on the table, you may damage your brand or, even worse, ignite a competitive price […]

Book: Impact Pricing – Your Blueprint for Driving Profits

Summary: Pricing strategist Mark Stiving dares you to take a fresh look at the framework behind your product price, and asks—how can you make a greater impact? Stiving empowers you to revaluate your pricing approach, urging you to stop focusing on price as a means to sell and start focusing on price as a tool […]

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

Dilbert on 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.

“The single most important decision in evaluating a business is pricing power,” Buffett told the Financial Crisis Inquiry Commission in an interview released by the panel last week. “If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you’ve got a terrible business.”

     – Warren Buffett

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

     – Katharine Paine

Other Resources

Video: Pricing Manager’s First Day

A very popular pricing animated video that captures the struggles that come with being a Pricing Manager.

Report: Dynamic pricing in a smartphone world – a shopper showrooming study | parago

In this study, parago found that showrooming — the practice of comparison shopping on a smartphone while in-store — is up 400% over last year, and this consumer shopping behavioral shift is occurring across all income levels and retail categories. Amazon is the #1 way US consumers compare prices on their smartphones at physical stores.

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.

Paper: Software as a Service Pricing Strategies White Paper Released | Bessemer Venture Partners

September 2013 Authors: Byron Deeter Related Strategies: Cloud Computing The explosion of cloud computing and low friction delivery models, is also creating the opportunity to completely reinvent the software business models that accompany these products.  As a result, tremendous innovation is occurring in terms of product pricing and packaging.

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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