Value Conversations in Pricing

May 18, 2017
Your company has defined and built a product. Your marketing team promotes it. Your sales team is looking for and persuading buyers to become customers. Ideally, this whole process runs smoothly because you started out by listening to the market. But much of the time this isn’t the case. Often companies build products because someone thought it was a good idea. By the way, it might have been a good idea. Regardless of how you got here, now you have a product and some people are buying it....

Premature Pricing: When to Communicate Pricing Information

Apr 26, 2017
When during the sales cycle should you talk about pricing? The correct answer is “it depends.” It depends on the type of sales cycle or buyer’s journey. It depends on the type of product you sell. It depends on the familiarity of your market with your competitors. However, if there is one guideline on this topic it is this: Communicate price after value is understood. Sometimes they happen simultaneously. Notice that almost all B2C sales situations clearly show the price of the product...

Becoming a Pricing Expert

Apr 13, 2017
A question from a reader: Just to introduce myself, I started my career in a cost consultancy startup that was involved in implementing activity based costing and later moved into my new role in pricing and I am realising that I am coming up short in this field and I am constantly seeking new knowledge and training. I am on a process to register a side consultancy to help small to medium companies in my country to understand their “cost to serve” and to advice on their pricing. I...

A Question About Pricing Models

Feb 15, 2017
“Mark, I was in your pricing class yesterday (I was the obnoxious one wearing a baseball cap) and it was very informative, I learned a lot. “I know you’re very busy, and I apologize for the imposition, but one thing we didn’t go over were different pricing models. For example, in our business we have varied pricing models for our SaaS products. Some are a variable monthly fee based on hospital size (bed count), some are “pay by script” (for retail pharmacies), or a...

When to Price

Jan 16, 2017
Most companies only set prices after they have developed a product. That is certainly a critical time and it is the most obvious. They have to finalize the price at that moment. However, pricing should be done at many steps during the product development process and throughout the life of the product. Before a company builds a product, hopefully they have a business plan. That business plan should include revenue forecasts. Revenue comes from units sold times price per unit. You have to know...

Fake Sales at Top Retailers: The Power of Discounts

Jan 3, 2017
Los Angeles City Attorney Mike Feuer filed a lawsuit against Macy’s, Kohls, JC Penney and Sears for deceptive advertising. These firms allegedly advertised a high original price with a low sale price without ever having sold the product at the advertised original price. The law in California states that these firms must have sold the product at the original price within the previous three months. We will let Mike Feuer deal with the legality. Let’s talk about the power of discounts. Assume a...

Why Companies Don’t Focus on Pricing

Dec 19, 2016
Pricing is the most powerful of all of the marketing mix levers. Depending on gross margin, a 1 percent improvement in pricing can lead to a 10 percent increase in profitability. Yet, many companies don’t have a company-wide effort for price management. Sure, all companies have someone or some department who does pricing but very few truly understand and focus on pricing. Why? Let’s look at several explanations. It’s not their business. Companies spend 99 percent of their time and energy trying...

Commodity is a Dirty Word

Dec 1, 2016
Too often in class a student will say “I have a commodity.  The market sets my price.”  This is almost never true.  What’s worse is if you believe it, then you’ve given up trying to make higher profits using pricing techniques. If you believe your product is a commodity, then it is very likely that some market segment also believes it’s a commodity, that there’s no difference between your product and your competitors.  If you want to win those customers then you probably have to be price...

Another Day, Another Dollar (or Euro): Factors to Consider when Pricing International Products

Nov 15, 2016
Although we have provided on-site training at companies across the EU (and around the world) for decades, this year marks a milestone for us: We’ve taken our public training courses to the U.K. In honor of this, we’re revisiting some articles that offer tips and best practices that can help you do business in a global market. By Mark Stiving, Pragmatic Marketing Instructor You’ve done the hard work of creating a great product. You even analyzed your customers' willingness to pay....

Higher Prices for More Beer

Oct 24, 2016
Here is an interesting situation found by a reader of Pragmatic Pricing. Hi Mark, While travelling to Memphis earlier this week for business, I had dinner one evening at BB King’s Blues Club and stumbled upon an interested pricing example. Typically, everyone expects a volume discount, especially at restaurants – “super-size” it and get the large size for just a little bit more – as we all have been conditioned.  It would appear that BB King’s is taking advantage of that conditioning.  I almost...

A Pricing Question on Free

Oct 10, 2016
This came from a reader: “Hey Mark, Hope all is well, the pricing knowledge from the course has certainly helped in many of our team discussions in ‘doing the right thing’ when it comes to pricing. I thought the below question may be a good topic for your pricing blog. We offer various promotions throughout the year for different services, some of which may include delivery. One area that comes up continually with any promotion that involves delivery is should a promo period...

BOM: Business Plan

Oct 6, 2016
October’s Box of the Month is the business plan. The business plan provides an objective analysis of a market opportunity, articulating what you learned to quantify the risk and the potential. Throughout the month we’ll highlight articles, webinars and blog posts around business plan development including understanding your business and how your products fit with it and why pricing should factor into your business plan. You can also discover why it’s important to know the business plan for your...