As a small business owner, you don’t have big pricing departments or teams of PhDs with fancy algorithms to set prices. Pricing is often the last thing you want to think about (we’ll talk about why this is a big … Read More
value pricing
First step in running a profitable business: don’t be scared of making money
In my line of work, I encounter a lot of small business owners who set their prices by copying the “going price” in “the market” or by sticking their fingers in the wind. This is unfortunate, but fixable. What really … Read More
If you think you’re worth it, but can’t say it…
A lot of businesses think they have a great product or service. Something above and beyond what the competition offers. But when it comes time to put a price on all this awesomeness, they are still cheaper than the competition. … Read More
Value Pricing: When do I have to cut my price?
I was talking with a customer the other day about a new service his company has developed. It’s innovative and profitable, and they have found ways to reduce a lot of their costs to make it even more profitable. The … Read More
Price Optimization 101
I get a lot of questions about price optimization, so I just wanted to make it really simple. Write down your costs. Of course, you won’t know your real costs, so just use estimates, preferably from 2-5 years ago. These … Read More
Value-based Pricing: When can I stop asking questions?
How do you know when to stop asking questions about value? Couldn’t this go forever, asking “Why? Why? Why?” until we end up in a philosophical discussion? You want to ask questions until you no longer get meaningfully different answers. … Read More
Value, pricing, and the TSA
I try to avoid political commentary, but sometimes I just can’t avoid it. The airline industry has always been a tough place to make money, but since 9/11, terrorism fears, long delays in security, and surging oil prices have really … Read More
Better, Not Cheaper: Red Velvet Events
In a previous post, called Be Better, Not Cheaper , I talked about how important it is to differentiate elements of your offering other than just your price. Here’s a great example of executing that strategy from Austin and San … Read More
10 Maxims for Improving Profit through Better Pricing
Your price ceiling is limited by the Perceived Differential Value of your offering. Customers determine this, but you can help them along the way. Your price floor is limited by your costs. If your floor and ceiling are the same … Read More
Don’t limit yourself on price
If you’re reading this blog, you probably know the dramatic profit impact of small price improvements. (For a company running at 10% net margin, a 1% price improvement increases profit by 10%.) Yet even when companies want to improve pricing … Read More