Recommended Reading: “Pricing Tactics, Strategies, and Outcomes”

Posted on August 30th, 2007 (1 Comments)

I’ve been searching for a book like this for the last decade! I’ve been on the lookout for a compilation of the “greatest hits” of economics articles that serve as the foundation of pricing strategy. This is exactly what “Pricing Tactics, Strategies, and Outcomes” (edited by Michael Waldman & Justin P. Johnson) is: a two volume 1200+ page compilation of seminal academic pricing articles.

First off, it’s important to understand what you are getting when you read academic articles. In my blog, I often discuss new pricing ideas that I support with anecdotal evidence. Academic articles start off with creative ideas and support them by creating models. By a model, I mean construct a mathematical analysis, based on a set of assumptions, that “prove” the validity of an idea. While one can quibble about what assumptions are made or question the need for such rigorous mathematics – these analyses have more backing than someone saying “here’s a new idea.” For example, many academic articles start off with a nice intro, a fairly complex theoretical middle section, and then a final conclusion. Not to say that all articles in “Pricing Tactics, Strategies, and Outcomes” are in this format, but many are. Many people tend to intensely read the introduction and conclusion of academic articles and skim the middle part. I want to emphasize the format of these academic articles, so you know exactly what you are getting with this book.

Now in the spirit of full disclosure, I must note that one of the editors (Mike Waldman) was on my dissertation committee. Mike was a good mentor but that said, we never established a personal friendship as I did with my other committee members.

I can strongly recommend this book on its merits. Many of you who read this blog are “into” pricing. This book includes all of the articles that Mike Waldman (an economist ranked in the upper 5% of his profession) and Justin Johnson have selected as “must reads” in pricing. This is not to say that I don’t have an issue or two with the book. For example, it’s surprising that the editors did not include George Akerlof’s lemons paper – one of the best papers in economics and an article that the editors themselves cite in their introduction as starting a revolution in pricing.

Now for the tough news. Given that this is a pricing book, it’s priced accordingly…$565 for the two volume set. A steep price, but what’s the value of having the true academic foundation of pricing at your fingertips? If you study these articles, you’ll have the pricing background (if not more) of any Ph.D. student who specializes in pricing. It took me 5 years and over $150,000 (in today’s dollars) in tuition (which I worked off by teaching) to attain a similar academic pricing background. All of a sudden, $565 seems like a true bargain!

Have a great Labor Day weekend!

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