Archives posted in: Pricing
Software is good at automating repeatable processes, but that doesn’t make them the right processes. Doing the wrong thing efficiently isn’t the same as doing the right thing. There’s a reason that Peter Drucker wrote about the effective, not the efficient, executive.
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On the other hand, getting people to open up their wallets and pay for a service, especially if they’ve become accustomed to using it for free, is hard. That’s true for pay-only services and it’s also true of the attempt to split the difference between free and paid: freemium.
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If you find yourself in this situation, reducing price can help to clear existing inventory but it will not solve the fundamental problem of lacking a product that people want. Better to preserve what profits you can and invest them into developing a product that addresses a customer need.
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Not only will the American economy be hurt, these actions by an American President with very limited knowledge about economics, will affect the economies of many nations.
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A good pricing decision is two-fold: One defines an aspirational list price and a commercial policy that deducts from this list price known discounts, which lead to the expected target prices by customer segment and perhaps channel.
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If you can successfully explain why implementing a value-based pricing strategy will be instrumental in moving your company towards their goals and targets, you should be in a pretty good position to get buy-ins.
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In this article I will review some of the issues engaged and practices suggested by different authors, and then offer the Half-Gains Double-Losses rule to define the capturable value from the economic value to customer and therefore drive a price recommendation for guiding the pricing decision.
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Remember, pricing professionals come from a wide variety of backgrounds and the skills needed to be successful can be acquired in many related functions and departments. Just because you don’t have the word pricing in your current title does not mean you are not qualified!
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In this article, we look at how I have often seen pricing improvements measured and why I have some serious reservations with this common metric. I do this in the hopes of generating responses on how you accurately measured the effectiveness of pricing at your company.
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Pricing is not only numbers, but strongly psychological and emotional. Certain norms emerge that dictate how products and services are sold in different industries. Customers come to expect those norms, whether or not they are necessarily the most economically efficient.
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