One key “art” of pricing is finding segments that are willing to pay different prices (higher or lower) for your product and designing targeted strategies to “extract” their willingness to pay. And while the market encourages this creativity – which leads to higher profits and growth – the result is a specific gender, race, or income class systematically pays more than others.
The key question is whether this result – often unintentional – is in line with your company’s morale compass? Just because the market blesses a pricing strategy doesn’t mean it’s ethically right.
Please check out my latest piece for the Harvard Business Review which discusses the ethical implications of free market pricing. And as always, thank you for reading!
Posted on January 29th, 2016 (0 Comments)
When business is strong, it’s easy for arm chair pricing strategists and economists to chant, “Raise your prices.” Economists will defend their position by citing “supply and demand” – a fundamental concept of Econ 101. It’s ingrained in pricing strategists to boost prices to “capture value.” I think raising prices to capitalize on what may be a short term blip in demand can be a big mistake – often detrimental to the long term health of a business.
Please check out my latest – actually my 75th – piece for the Harvard Business Review which discusses the pricing strategy used by the Franklin Barbecue, an Austin, Texas BBQ joint which Bon Appetit magazine has anointed the best barbecue in America. Pitmaster Aaron Franklin’s strategy for pricing (as well as his barbecue) of “low and slow” provides insight for all people involved with pricing can learn from.
Thank you for reading and please follow me on Twitter: @cultureofprofit
Posted on November 12th, 2015 (0 Comments)
Should brick-and-mortar chains cede the web to Amazon? Wal-Mart has continually stumbled online – it recently lost $20 billion in market cap in part because it announced that it needs to invest more into its ecommerce platform, which will affect profits. Amazon has amassed a giant head start – claiming 244 million customers in 2014. The situation for brick-and-mortar chains seems like a lost cause.
Brick & mortar stores can successfully compete online. Please check out my latest piece for the Harvard Business Review which discusses that yes, while the Internet is hip and technologically advanced, at its roots, it’s a commodity market. As a result, many of the time tested techniques (here’s a hint: think S & H Green Stamps) that have helped commodity retailers can succeed.
For the latest pricing news and cutting edge ideas, please follow me on Twitter: @cultureofprofit
Posted on October 21st, 2015 (0 Comments)