Any evening that you go out for dinner gives you a basic lesson in economics.
As you would recall, the 3rd slice of your favourite pizza at does not taste as good as the 1st slice. The economist have a term for it. It is called declining marginal utility. And people want to pay less for something whose utility is low. Continue reading Discount Management
Effective pricing plans can be the single most important piece in the over all pricing strategy.
Some of the questions that it answers are: Is your price metric encouraging or hindering usage? Are the number of options and features optimal or are they overwhelming the buyers? Can a smart product bundling significantly increase volume uptake?
Continue reading Price Plan Redesign
It is not uncommon to have a product portfolio that does not have any products in a particular price range and a lot of products in some other price range. Any such gap or clutter in a product portfolio needs evaluation.
Continue reading Portfolio Gap and Clutter Analysis
When it comes to price changes, the management is usually divided in two camps. One group believes that a price increase is justified because the product offers superior value. They are usually in minority. The other group, opposes any price increase.
Continue reading Price Optimisation: A small tweak in price, big gain in revenue
A pricing manager is full of self doubt.
‘Am I over charging too much or giving too much for free? The competition is being aggressive with its price. If I lower my prices what will happen to my brand positioning? Will the customers desert me if I increase my prices?’
Continue reading Pricing Audits: Fastest way to find price related opportunities
Have you heard the term ‘losing penny to earn a dollar’ ? Loss leader strategy follows the same principle.
In a loss leader strategy, you price some products low to increase the foot falls. These foot falls translate into additional sales, which more than compensates for the profit shortfall from the loss leader. So the story goes. Continue reading Avoid these classic traps while designing a loss leader
Many industries are destroying their capital by indulging in price wars. Online retail, telecom and airline are some of the industries that are on top of my mind. It usually starts with one company and then others make counter moves, thus causing a downward spiral. Continue reading React wisely to competitor’s price cuts
In various blog posts, I have asked the readers to base their pricing decisions on elasticity. In this post, lets try to understand the term better.
Lets start with a mental exercise. Imagine you increase the price of your product by 1%. What happens next?
Continue reading Price elasticity: A short primer
Periodic recessions have become a fact of life.
During a recession, there is a broad based collapse in demand and an excess inventory. In general, the companies start reducing prices during recession. Since the competitors use the same methods, such a strategy is mostly ineffective. Continue reading How to price during recession ?
With the prevalence of Software-as-a-Service, subscription pricing has become familiar to most of us.
These days Microsoft office is also available as subscription through Office 365. Similarly, we see subscription pricing in cable TV, streaming movie & music services and online magazines. Continue reading Subscription pricing: New frontiers