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This Week in Pricing > 9/27/14

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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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

My Starbucks Raised the Price Again | The Sales Hunter

Yes, they did it again, they raised the price of my grande coffee $ .15 Hey, they didn’t go up  a nickel or even a dime.  They increased it by $ .15. The amount got me thinking about a basic principle of raising a price that I talk about in my book, High-Profit Selling: Win the […]

How The Internet Killed Profit | TechCrunch

Price Transparency To the delight of users, we have a more competitive global marketplace than ever, whether it’s one of the many flight, hotel or car rental aggregation tools, or even the entire world of e-commerce, it appears we can comparison-shop and spot a deal in seconds. Yet, while brick-and-mortar retailers like Walmart and other […]

The Illusion Behind Uber’s Pricing Fiasco And How Startups Can Avoid The Same Trap | Forbes

One of the darlings of this generation of tech companies, Uber, ran into what seems to be unanticipated trouble this year: A hefty backlash over its pricing polices. The company, which aims to disrupt taxis and black car services, started charging clients more if they took cars during peak traffic periods. The idea was that […]

Customers tricked by ‘yo-yo’ pricing on discount kitchens – Firms artificially inflate costs for short period to make their lower prices seem even cheaper  | Daily Mail

Stores set artificially high prices on some products for short periods  This makes other items, such as kitchens, seem even cheaper Price comparison website finds that four major firms use the pricing ploy  Big chains are using ‘yo-yo’ pricing to fool customers into thinking they are getting a bargain kitchen, an investigation shows. The stores […]

From healthy fries to segways – Why most products fail | The Globe and Mail

In fact, 72 per cent of new products are failures, according to a global study released by Bonn, Germany-based marketing consultancy Simon-Kucher & Partners. The firm surveyed 1,615 managers in 40 countries. It found that most newly launched products fail to meet their profit targets “because companies neglect or ignore essential pricing and marketing activities […]

Why Jewelry Stores Hide The Price Tags | NPR

When Tara Silberberg was a little girl, she helped out at her parents’ jewelry store and wrote the prices on the tiny price tags. “I had such good handwriting, too,” said Silberberg. “Just teeny tiny, minuscule little handwriting.” Not that customers would see it: The price tags were turned upside down or tucked away. Even […]

Amazon Admits It Whiffed On Fire Phone Pricing | Huffington Post

The writing was on the wall. “We heard the feedback,” Dave Limp, senior vice president of devices at Amazon, said in an interview with The Huffington Post. “We … heard it from customers that they expected more value. We had had a plan to reduce the price. To be perfectly honest about it, it was […]

Destructive Lifecycle Pricing Strategies | PricingBrew

Our subscriber webinars very often put us in the precarious position of having to be the bearers of bad news. And our latest webinar, “Lifecycle Pricing in B2B” proved to be yet another example of this dynamic. On the one hand, it’s our mission to provide the research and information that Journal subscribers are looking […]

What Can Big Data Do For Your Pricing Strategy? | Beyond the Buzz of Big Data

Big Data Can Do a Lot More For Pricing Big data is most effective when insights are layered and they begin to reveal patterns that were previously unknown to the business. Once it’s been revealed, pricing strategy’s role in maximizing CLV and enabling brand engagement is better understood.  The pitfalls of discounting are easier to […]

Eruptions on Europe’s Drug-Pricing Horizon | Pharmaceutical Executive

“Better volcano forecasting”, the European Union announced with pride in mid-September. The breakthrough was a new EU-funded monitoring scheme for Iceland’s volatile geology. What the EU has paid less attention to is the volcano that is soon likely to blow apart its assumptions on the pricing and reimbursement of medicines. The agenda for the informal […]

Wal-Mart’s School Supplies Are More Expensive Online | Businessweek

Attention Wal-Mart (WMT) shoppers: Prices may be slightly lower in stores than at Walmart.com. Analysts at Bloomberg Intelligence, compared 31 identical school supplies at Walmart stores and on Walmart.com—crayons, markers, pens, etc.—and found cheaper prices in the stores in three of four surveys. Wal-Mart’s official policy is to have the same prices online as in […]

Diapers.com Founder Raises New Funds for Amazon Rival | WSJ

Lore declined to give specifics, but Jet has been telling potential partners that it will distinguish itself from Amazon, eBay EBAY +1.02% and others by pricing products based in part on their proximity to the buyer. That way, customers could potentially get their merchandise quicker and at lower cost. According to a description on New Enterprise […]

New Infographic from Wiser Addresses Why Pricing Strategy Is Essential in Online Retail | Digital Journal

Arguably one of the largest drivers of profits, finding the right pricing strategy is vital for success in today’s hyper-competitive online retail market. Pricing is a concept that is anything but new to retailers, but the ways that they are approaching it are changing quickly. Comparison shopping is now more prevalent than ever, largely due […]

With new phones, carriers pricing wars heat up | CNBC

AT&T does have a lower-price offering—its new “Cricket” brand—but it’s staying away from any association with AT&T. “They don’t advertise it as an AT&T brand,” Sine says. “But Cricket can go down-market and slug it out with the low end carriers very low prices, while still using the AT&T Network and using that volume to […]

Startup Cardinal Sins — Under-Pricing Your Product Offering | Forbes

One of the things I see on a remarkably frequent basis is startups that appear to be charging well below both the purported value of the offerings and what the market should be willing to pay.  More importantly, it is well under the price required to sustain a viable business model, unless the company achieves […]

$749 iPhone 6 Plus Costs Apple Just $215.60 to Make – IHS | NDTV Gadgets

The new iPhones went on sale Friday and address a key advantage rival Android phones have long had: size. The iPhone has been Apple’s main source of profits and is expected to remain so for at least the next year. Apple will make more profit on the Plus version, according to a report from research […]

The $84 Reason Apple Wants You to Buy the iPhone 6 Plus | Businessweek

Maybe you’re still debating between the iPhone 6 and the iPhone 6 Plus. Apple AAPL has a good reason for wanting you to opt for the larger model. It costs an additional $15.50 to make the larger iPhones, according to a breakdown by researchers at IHS IHS, but the sticker price is $100 higher than […]

Apple CEO Goes From Record Sales to iPhone Stumbles (Video) | Businessweek

Sept. 25 (Bloomberg) — Douglas C Lane & Associates Managing Director Sarat Sethi and Miller Samuel President and CEO Jonathan Miller discuss Apple’s new products and outlook for the company. They speak on “Bloomberg Surveillance.” (Source: Bloomberg) Access video here: Apple CEO Goes From Record Sales to iPhone Stumbles.

More Fun With Customer Based Product Pricing Strategies – #1 | Boardroom Metrics

This continues a series of posts around the importance of pricing to the bottom line. Unfortunately, many firms approach pricing in a reactionary and ill informed manner. Inevitably, pricing is far more complex than many organizations realize or resource for. Pricing should be an ongoing process that is recognized for its profit potential, both short […]

Types of Product Pricing Strategies #3 – Customer Based Pricing | Boardroom Metrics

My initial blog on pricing strategy, ‘How To Set Prices To Seriously Increase Profit,’ was written to identify pricing as an under-utilized tool to drive your company’s bottom line. Since pricing is a complex issue for many organizations, I decided to write a series of posts regarding different types of pricing strategies, moving along a continuum […]

FTC spotlights reference pricing model’s numerous problems | Healthcare Payer News

Federal trade regulators have proven their willingness to go after hospital consolidation. Now, they’re raising some new concerns about an up-and-coming insurer strategy. Reference pricing, the practice of setting a maximum price for elective services and procedures, is one of several emerging strategies to incentivize provider efficiency and valuable consumer choices. It’s not a bad […]

India considers price cap on medical devices | MassDevice

India mulls instituting a maximum retail price cap on medical devices in the wake of price gouging allegations against some of medtech’s largest players. Indian regulators may impose price control measures on such medical devices as stents, catheters and implants in response to allegations of price gouging and bribery, according to a report in the […]

 

Events & Resources

 

Events

Webcast: The Fundamentals of Price Segmentation | PricingBrew

Date: Thursday, October 2, 2014 Time: 10 AM Pacific / 1 PM Eastern Demystifying an Essential Ingredient for More Profitable Pricing in B2B Having a solid understanding of price segmentation is critical for anyone that touches pricing in a B2B environment. And just about every effort that seeks to improve pricing has to start with an accurate […]

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: 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

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

A few days ago I posted a real-life story about buying my favorite ground coffee at 68% off regular retail from a local supermarket. For those of you who are new to this story, you can check it out here. This topic seems to have struck a chord because many of you have emailed me after the […]

Pricer’s Points: Microsoft’s tablet pricing strategy. | Matt Burnett

This is a counter argument to an article written by Tony Rizzo of techzone360.com. You can read it here. Tony Rizzo of techzone360.com has written a piece concerning Microsoft’s failed attempt at making a dent in the tablet market. Rizzo argues that a core problem with Microsoft’s strategy was pricing. In particular the fact that Microsoft didn’t […]

Pricer’s Points: Product bundling: when is a good time to use it? | Matt Burnett

When is a good time to bundle different products/ services together? Product bundling is what it sounds like: bundling multiple products into one package with a single price. It’s nothing new and is common in certain product categories: software (e.g.Microsoft Office), games consoles, airlines and even restaurants (the three course meal). So why bundle? Product bundling […]

Top Discussions

Discussion: Most Pricing Problems Aren’t Pricing Problems

Pricing News LinkedIn Group Discussion You see, most supposed “pricing problems” are usually just symptoms of problems in other areas. Pricing is the point of the spear, where the decisions, actions, and inactions of a bunch of different groups all come together and are made manifest as a price in the market. So, while pricing […]

Discussion: It’s Time to Embrace Congestion Pricing

Gizmodo Article An ambitious new transportation plan for DC announced last week includes a massive public transit expansion, additional subway line, and beefed up network of bike lanes. But the proposal that’s getting the most attention is the introduction of congestion pricing. Yes, DC wants to charge cars to enter its downtown. And more cities […]

Discussion: Making “Freemium” Work

Harvard Business Review Article Over the past decade “freemium”—a combination of “free” and “premium”—has become the dominant business model among internet start-ups and smartphone app developers. Users get basic features at no cost and can access richer functionality for a subscription fee. If you’ve networked on LinkedIn, shared files through Dropbox, watched TV shows through Hulu, […]

 

Books

Pricing & Revenue Optimization

Summary: This is the first comprehensive introduction to the concepts, theories, and applications of pricing and revenue optimization. From the initial success of “yield management” in the commercial airline industry down to more recent successes of markdown management and dynamic pricing, the application of mathematical analysis to optimize pricing has become increasingly important across many […]

Pricing for Profit – How to Command Higher Prices for Your Products & Services

Summary: Many small business owners are trapped by industry pricing and market misconceptions, when they could be compensated for the true value of the product or service being offered. The low price they feel compelled to offer limits their ability to generate profits which, in turn, slows their response to changing customer needs. The good […]

Pricing for Profitability – Activity-Based Pricing for Competitive Advantage

Summary: Three things can happen when establishing a product price. A price set too high is a lost sale that could have been profitable at a lower price. A price set too low is rewarded with unprofitable work. Only when a price is set appropriately does a company make both a sale and a profit. […]

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

     – Katharine Paine

“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

Paper: Dynamic pricing with demand learning under competition | Massachusetts Institute of Technology

Abstract In this thesis, we focus on oligopolistic markets for a single perishable product, where firms compete by setting prices (Bertrand competition) or by allocating quantities (Cournot competition) dynamically over a finite selling horizon. The price-demand relationship is modeled as a parametric function, whose parameters are unknown, but learned through a data driven approach. The […]

Report: Global Pricing Study 2014 | Simon-Kucher & Partners

72 Percent of All New Products Flop Sep 10 2014 Profitability at risk: Most companies fail to successfully position their new products in the market, a recent study reports. This problem is self-inflicted, but curable: Pricing and marketing need to be the top priority of the innovation process. More than ever, price pressure and price […]

Blog: Case Studies – Distributors | Strategic Pricing Associates (SPA)

The following are highlights from some of  our distributor client case studies that will help you to learn more about the significant margin improvement with a fast ROI realized by some of the 400 distributors that have partnered with SPA. These case studies cover all aspects of SPA’s work with clients including data and analytics, sales force […]

Blog: The story of Asia Pricing Professionals | Jesper Hansson

Asia Pricing Professionals (APP) was established in 2011 by a few pricing practitioners. I was one of them. At first we were just meeting up to share ideas and challenges from our daily jobs. There wasn’t many pricing practitioners in Singapore back then. Most people working with pricing were either doing so in a marketing, […]

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 […]

Video: THE WICKED SICK PROJECT – BMX

One of our favorite videos that take a unique route to explain how much perceived value is at the heart of successful premium pricing programs.    jimboingo A rad to the power of sick test that sets out to prove the power of creativity by George Patterson Y&R Melbourne. We bought a BMX off ebay, […]

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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