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However, DDP will lead to a zero-sum optimization in today’s market conditions. A.T. Kearney anticipates that DDP will lead either to a zero-sum optimization (as every market player feels forced to adopt DDP) or even to a strong increase in destructive price competition and consumer distrust. Here’s why: Automatic price matching means instant retaliation. Retailers believe they can grab some share by heavily discounting a hot...
At some point, every company faces the question of when and how to increase price. For many companies, its an annual exercise. For others, price increases occur many times throughout the year. There are phantom price increases (think of that ½ gallon of orange juice that is now only 59 ounces, but costs the same), hidden price increases (the introduction of airline fees), ‘friendly’ price increases (dear...
I once worked at a company that priced everything with a .95 ending. The bestselling software package was $999.95. Add-on products were $9.95, or $19.95, or $49.95. Everything ended with a .95. It had been this way for more than twenty years. One day, one of the VPs suggested we change all prices to end in .99. The rationale was that raising prices from .95-endings to .99-endings would net an extra four cents for every transaction. But...
Let's assume for a minute that we are in an environment where the economy is sluggish, customers are price sensitive, there is a lot of price comparison, how do you strategically price your product in that environment ? Do you lower your price, and commit what I call revenue suicide. Death by revenue, because we all know its easy to make a customer get used to lower price in such environment, and much harder to get them to the old higher...
A friend, also named Scott, recently sent me an article Leading the Way that discussed the frequency of small lubricant competitors leading the way in price changes.  The article, originally published in Lubes'n'Greases magazine demonstrated that independent producers increased prices of lubricants as frequently or more than the major producers.  The article reminded me you don't have to be the largest competitor...
If a business has not figured out how to make and get it into the hands of customers at a cost lower than what the customers are willing to pay for, it is not a product yet. If you insist on calling it a product you are not running a business but practicing a hobby. That stricter definition of adding profit criterion does not and should not apply to a MVP. This is because the primary goal of a MVP is not a defensible business...
A recent article in the New York Times got me thinking about how to stay on the right side of the law, while still extracting the most from pricing. The article talks about the biggest no-no of pricing: colluding with competitors.  NEVER do this.  Never let your employees do this.  You will get caught and the penalties are severe.   This can get difficult to control with a sales force that negotiates price. ...
Dynamic pricing is highly complex – and sometimes not intuitive.  A significant increase in observed demand for a period may not actually drive a significant increase in forecast demand.  And, many times even a large increase in forecast demand for a higher fare has little or no impact on the seats set aside for that demand.  Certainly, such results are examples of why airline dynamic pricing (“Revenue...
So, you have a printing business and you want to make it a big success. What is the best commercial strategy for you to adopt in order to achieve this goal? Let’s bottom-line it for you: in today’s super competitive printing industry, it is all about the price. It is not always about the cheapest price, but it is always about the customers perceived value for money; which is just another...
I resolve to: Set prices according to the value we bring to customers, not according to my costs. Use the rich data I have in my transactions and CRM interactions to better understand my customers’ needs, how they react to prices and offers, how their prices compare to similar customers and situations, the reasons we win and lose business, and our optimal price structure. Segment my customers into groups that have common...