pricinglessons

#owp2013 pricinglesson #14: There are only two types of discounts. Stupid ones and smart ones. Getting rid of the stupid ones can increase your margin by 1% on average.

Use the price waterfall method by McKinsey to identify and eliminate "stupid" discounts

#owp2013 pricinglesson #11: Pricing is pain management. Because losses count heavier than gains, make sure that the perceived pain is on the value, not on the price.

#owp2013 pricinglesson #10: In the ocean of information overload, customers are searching for reference points. It’s your decision where you put your anchors.

#owp2013 pricinglesson #9: Your price serves as an indicator of quality, whether it makes sense or not. It’s probably your most important positioning tool.

pricinglesson #8: Research your customers’ willingness-to-pay pricinglesson #WTP: and watch out for the cliffs in the demand curve.

There are two dominant research methods in pricing: conjoint analysis and van Westendorp.

The Price Sensitivity Meter (PSM) is a market technique for determining consumer price preferences. It was introduced in 1976 by Dutch economist Peter van Westendorp. The technique has been used by a wide variety of researchers in the market research industry. The PSM approach was a staple technique for addressing pricing issues for the past 20 years. It historically has been promoted by many professional market research associations in their training and professional development programs. The PSM approach continues to be used widely throughout the market research industry and descriptions can be easily found in many market research websites.

 

#pricinglesson 7: Cash is a fact, costs are opinions. Consider «avoidable» costs instead of variable costs and study margin-equivalent sensitivity scenarios. #owp2013

#pricinglesson 6: Cost-based pricing is straightforward, but you leave money on the table two times. Both when demand is high and when demand is low. #owp2013

Most relevant pricing lessons at #owp2013?

Today, I asked the participants which pricing lesson is most relevant for them. Here is the ranking.

 

#pricinglesson 5: Where do you put your price tag? The price carrier decision is fundamental, and the textbooks got it wrong.

#pricinglesson 4: Segment your customers and never let an executive fly economy. Put a smart fence between value-buyers and price-buyers. #owp2013