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This Week in Pricing > 8/2/14

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.

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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.

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The Week’s Top Headlines

Seven Ways to Avoid Competing On Price | Entrepreneur.com

Who do you think is the low-price leader in retailing? Once, the quick answer would have been Wal-Mart. But here’s a cautionary tale of what can happen when you compete on price: A new study from retail consulting firm WSL/Strategic Retail shows 86 percent of customers no longer believe Walmart has the lowest prices. That’s […]

Why let your sales force influence product prices? | MIT News

From the outside, you might not notice the ongoing tension within many large businesses: the battle between salespeople, on the one hand, and marketers and product managers, on the other. Because the salespeople often benefit from lower prices, they question their own firms’ price policies. But the marketers may suspect that the salespeople just need […]

Translating Price Objections | The Sales Blog

Your price is higher than your competitors. Translation: I don’t perceive the value and you haven’t differentiated that value. If you are creating more value than your competitors, you need to be able to help your dream client perceive that value. If they don’t perceive the value, it’s likely you have not differentiated your offering from […]

How to Find the Perfect Price Using Consumer Psychology | Inc.com

During a recent talk, Yammer’s director of analytics gave tips on determining prices according to not-so-predictable human behavior. … However, the offering wasn’t a failure at all. In the end–because customers consequently perceived the online and print deal to be such a good value–two thirds of The Economist‘s subscribers switched to the print and online package. There […]

10 Reasons Customers Will Pay More | Inc.com

4. Your product burnishes the buyer’s reputation. Consumers buy fancy-branded luxury goods because it makes them look and feel wealthy.  The same dynamic operates in the business world, which explains why companies are still buying high-priced, IT-intensive ERP systems. 5. Your product has a lower cost of ownership. It’s not all about price… it’s about […]

Isn’t it Time to Start Standing Up for High Prices? | Capterra

If prospects and customers choke over premium prices, they may be taking their cue from their salesperson. According to recent research by The Brooks Group, one in three sales reps think their prices are too high. Really, people? If you don’t believe in your price, who will? If you’re among the nonbelievers, you have three choices: You […]

4 Factors that Influence the Price Your Customers Will Pay | Business Know-How

Most customers follow a four-phase buying pattern when choosing where to make their purchase. Use your knowledge of these patterns to determine the best pricing for your products or services. There are many schools of thought regarding how businesses should set their pricing and just as many ways of analyzing your business’ pricing models. From […]

What Pricing Strategy Beats Discounts? | Neuromarketing

If you want to sell more product by running a sale, which would make more sense: advertising “price cut 33%” or “50% more” product? Functionally, the two are the same level of discounting. Researchers at the University of Minnesota found, though, that a “50% bonus pack” sold 71% more than a “35% discount,” even though the latter […]

Who Wins With Dynamic Discounts? | PYMNTS.com

The digitization of payments between businesses opens up a whole world of possibilities with respect to invoicing and payment terms. Dynamic pricing –  where a buyer and supplier establish terms to accelerate payment in return for a reduced price or discount on the acquired goods or services – is one of those options. Knowing how […]

Price Or Customer Service? What Do Your Customers Really Want? | CustomerThink

Are your customers prepared to pay for better customer service? Or, do they just want the ‘best deal’ regardless? A challenge for many businesses is maintaining that balance between price and service, and working out what the best thing to offer is. Researchers from the Institute Of Customer Service, as part of their UK Customer Satisfaction Index […]

A Super-Simple Way to Make Your Prices Seem Lower… With One Catch | Neuromarketing

Want to make your prices seem lower without actually changing them? I’ve got a research-based technique that will do exactly that, with one small catch: your prices will only look lower to your male customers. In a study titled Are Men Seduced by Red? The Effect of Red Versus Black Prices on Price Perceptions, researchers in the U.K. […]

Exploring The Economics Of Paying What You Want | NPR

NPR’s Eric Westervelt speaks to OZY reporter Pooja Bhatia on the economics of choosing to pay any price you want. Access the audio recording here: Exploring The Economics Of Paying What You Want.

High/Low Pricing – Specific Pricing Strategies | Boundless

High-low pricing is a strategy where most goods offered are priced higher than competitors, but lower prices are offered on other key items. KEY POINTS The lower promotional prices are designed to bring customers to the organization where the customer is offered the promotional product as well as the regular higher priced products. The basic type of customers for […]

The Online Pricing Trap – How Your Location Can Cost You When Booking Fares | Yahoo! Travel

For as much as the Internet empowers, there’s a dark side to your Web browser — namely in its ability to identify you as you. While it’s mighty convenient to allow your computer to remember your password, recall your username for login fields, and even save your address for online shopping, doing so may come […]

How Starbucks can raise prices for your coffee and get away with it | Quartz

How this price increase has impacted its sales (if at all) remains to be seen—the company reports earnings on Thursday, and the price hike took effect when the quarter was basically finished. (Though management may shed light on it and the broader issue of higher input costs during its accompanying conference call.) For her part, Piper Jaffray’s Regan […]

StubHub Increases Sales By Playing To A Simple Game Of Psychology With “All In Pricing” | Forbes

When it comes to marketing and sales, the best of the best play to what will ultimately make the consumer happy. If you think about that long enough, likely the first thing you want to believe with any purchase is that you got a good deal. Companies spend millions of dollars each year figuring out […]

When Staples Offered Items for a Penny, State Workers Ordered Kleenex by the Pound | WSJ

Big box retailer Staples scored a major contract to sell office supplies to the State of New York. But a penny-pricing arrangement on some items, and some savvy procurement agents, meant NYS made out like a bandit — and left Staples wondering what went wrong. Staples Inc. SPLS +0.18% made the State of New York quite a promise: Buy […]

Chipotle Traffic Jumps Even After Price Increase | Fox Business

Chipotle Mexican Grill Inc (CMG), one of the top-performing U.S. restaurant operators, on Monday reported a nearly 26 percent jump in quarterly profit after traffic to the burrito chain surged despite a menu price increase. Based on last quarter’s gains, Chipotle raised its forecast for same-restaurant sales growth, calling for an increase in the mid-teen […]

Amazon Prime Sign-Ups Increase Despite Price Hike | Business Insider

Amazon stock is plunging after it delivered disappointing Q2 earnings, including operating loss guidance of between $410 million and $810 million for Q3. One bright spot came, however, when CFO Tom Szkutak said that Amazon Prime subscriptions are “growing nicely” despite the March price hike from $79 to $99. “We’ve added more subscribers in Q2 […]

Box, Dropbox rethink future in midst of price war | SiliconValley.com

But now, thanks to a price war launched by Google, Amazon and other tech giants, almost anyone with a laptop or tablet can get cloud storage for less than the price of a latte. That means Box and Dropbox, which sell software for businesses and consumers to store and use files on the Internet rather […]

Rackspace is now ready to talk about charging for cloud infrastructure by the minute (updated) | VentureBeat

In announcing today the availability of the OnMetal service, which eschews traditional server virtualization software to slice each physical server into multiple virtual machines for running applications, Rackspace said it would charge by the minute. Actually Rackspace has always charged for cloud servers by the minute, but it’s the first time the cloud and hosting […]

Amazon Uses Math to Explain Why It Prices E-Books at $9.99 | Mashable

Amazon CEO Jeff Bezos famously picked the $9.99 price for e-books out of “thin air.” But in a blog post published Tuesday, the company offered some numeric justification for the figure. The $14.99 and $19.99 prices for e-books is “unjustifiably high” since “there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due […]

Amazon Hachette EBook Pricing | Business Insider

For the past several months, Amazon and Hachette have been having a very public pricing disagreement that left affected authors enraged and sparked a debate in the literary world about whether Amazon had too much power. We knew the battle was over e-books, but rumor had it that Amazon wanted a 50% cut of every sale, instead of 30%. In its post, […]

Recommended Resources

Events

Webcast: 3rd Annual Pricing Conference | Asia Pricing Professionals

When: August 11-12, 2014 Where: Shangri-La Hotel Kuala Lumpur, Malaysia Asia Pricing Professionals (APP) was established in 2011 by a few pricing practitioners. Since then a huge number of companies in Asia has started focusing on pricing and today it is a well known profession, just as marketing and sales. APP has grown as well and developed […]

Pricer’s Points Blogs

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 […]

Pricer’s Points: Pricing maturity and internal control | Jesper Hansson – CPP

We all like to look at companies with our pricing practitioner eyes and try to establish how mature they are in their pricing management processes. There are several different models available today which tries to ‘score’ a company. One of the most frequently used is a 5 step maturity model which goes from a mild […]

Top Discussions

Discussion: Uber agrees to new national policy that will limit surge pricing during emergencies

< The Verge Article > The taxi app falls in line with numerous laws that consider dynamic pricing during storms to be illegal price gouging Uber is well known for using a dynamic model it calls surge pricing that adjusts the cost of a fare based on supply and demand. The company’s CEO, Travis Kalanick, has defended this practice, […]

Discussion: SaaS Free Trial – Requiring a Credit Card is Shortsighted

< SaaS Growth Strategies Blog > That said, why do you offer a Free Trial in the first place? So prospective customers can get to know your offering before paying for it… … remember, they don’t already know, like, or trust your company or product yet. And we know in B2B especially, trust is huge… trust that […]

Discussion: Why Charging by the Hour is a Cop Out. Employ Value Pricing Instead

< Box Free IT Blog > I’ll go out and say it. The billable hour is a terrible measure for pricing your services. No one says to themselves, “You know what? I feel like buying 4.75 hours of my accountant’s time today.” Rather, they’re more inclined to say something like, “You know what? I really need help […]

Books

Beating the Commodity Trap – How to Maximize Your Competitive Position & Increase Your Pricing Power

Summary: Commoditization-a virulent form of hypercompetition-is destroying markets, disrupting industries, and shuttering long-successful firms. Conventional wisdom says the best way to combat commoditization is differentiation. But differentiation is difficult and expensive to implement, and keeps you ahead of the pack only temporarily. In Beating the Commodity Trap, Richard D’Aveni provides a radical new framework for […]

Book: Contextual Pricing – The Death of List Price & the New Market Reality

Summary: A few leading companies have jettisoned ideas about pricing that other companies believe are indispensible. The result has been superior performance against competitors who persist in a simplistic 1990′s belief in “value.” Contextual Pricing describes how buyers are influenced by comparison points and contextual messages more than by actual price levels. Identical products can […]

Book: Crush Price Objections – Sales Tactics for Holding Your Ground & Protecting Your Profit

Summary: These days it seems like we’re always in a buyer’s market. But even at a time when the word value is used interchangeably with cheap and the Internet is a bargain hunter’s paradise, there are ways for sales professionals to regain the upper hand. In Crush Price Objections, Tom Reilly, bestselling author of Value-Added […]

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

Discounting

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.

“With the price of life these days, you’ve got to get everything for free you can.”

– Carl Rogers

“Accept certain inalienable truths: Prices will rise. Politicians will philander. You, too, will get old. And when you do, you’ll fantasize that when you were young, prices were reasonable, politicians were noble, and children respected their elders.”

– Mary Schmich

Other Resources

Certification: Customer Value Modeling (CVM™)

The CVM™ certification is a one-day formal certification program on the customer value modeling methodology using the Economic Value Estimation® process. During this program, participants will learn: To identify true product and service differentiators. To select the right value drivers for a customer value model. To measure and quantify critical value drivers for a product […]

Training: Pricing Workshops | Stephan Liozu

Value-Based Pricing Workshop This unique workshop is grounded in the latest value-based pricing science following several years of academic research. The content combines theoretical presentations and practical exercises to deliver a total knowledge package on how to design and executive successful value-based pricing programs. Download the Value-Based Pricing Workshop PDF   Value-Based Selling & Negotiation for Value Workshop […]

Paper: A dynamic pricing strategy for high occupancy toll lanes | Transportation Research

Highlights We propose a toll pricing strategy which can dynamically adjust toll price. The toll is adjusted based on value of travel time and travel conditions. The objective can be modified to achieve various levels of delay and revenue. Case study demonstrates effectiveness and feasibility of the proposed strategy. Abstract High Occupancy Toll (HOT) lanes […]

Paper: Dynamic Pricing with an Unknown Demand Model – Asymptotically Optimal Semi-Myopic Policies | INFORMS

Abstract We consider a monopolist who sells a set of products over a time horizon of T periods. The seller initially does not know the parameters of the products’ linear demand curve, but can estimate them based on demand observations. We first assume that the seller knows nothing about the parameters of the demand curve, […]

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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