ZBC#94 [The art of pricing] ~ Smart Pricing/スマート・プライシング
Today, let me introduce Smart Pricing from Zenport Book Club#94 on Feb17th 2018.
Wharton professors and renowned pricing experts Jagmohan Raju and Z. John Zhang argues that there are few managers who take pricing seriously even though it’s very important point for management.
Then, still now, a lot of companies use outdated pricing methods, like cost-plus pricing.
Then, how we should do pricing?
For this question, they give one answer and provide the variety of pricing examples.
What is the answer? and what kind of pricing method have been born in these days?
Summary
- Still now, a lot of companies take familiar approaches for pricing, like cost-plus pricing, buyer-based pricing, and competition-based pricing.However, these pricing methods are not smart, because these are lack of focusing on customer’s purchasing behaviors.
- In terms of pricing, at first we need to focus on value customer can take through the service, then we need to validate it as price. It cannot be cheaper as well as more expensive than the value.
- Even if it is the same product, the value should be different for each customer. Then we need to prepare multiple pricing model for each customer.
- A lot of companies is trying to provide the variety of pricing models, such as Name your own price by Priceline, Freemium by Google, Snob Premium by Trump, Subscription by Amazon and Price wars Chinese companies.
Discussion
- As a manager, I feel pricing is one of the most difficult point. In my opinion, pricing formula based on the key value of customer’s business should be better.
- In terms of pricing, we need to care the following points. One is scalability (Easy to do Upselling and Cross-Selling?), and the other is whether it’s too cheap or not. Especially, I think the second point is very important. Certainly price is based on the value for the customers, but on the other hand, price itself has an impact for customer to valuate the product.Then we should always care whether our pricing invade the customer’s expectation for the product.
Conclusion
Today, I’ve introduced Smart Pricing, that describes the tips of pricing and wide variety of pricing mechanisms. Next, let me introduce Modern Monopolies from Zenport Book Club #95.
Related books
- Confessions of the Pricing Man: How Price Affects Everything
- The Psychology of Price: How to use price to increase demand, profit and customer satisfaction
- The Strategy and Tactics of Pricing: A Guide to Growing More Profitably
- 革命のファンファーレ
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