Starbucks gets a lot of attention in the pricing world for their ability to charge $4+ for coffee. There are good reasons they can do this (selling something physically addictive doesn’t hurt), but that’s a different post. This post is … Read More
value pricing
A Really Important Part of the Demand Curve
Josh Kopelman over at the Redeye VC blog has a great post (see image from post– click for larger image in original post) on the importance of the part of the demand curve when the price moves from “free” to … Read More
Value Trade Offs in the Mind of the Customer
The limiting factor on price is the differential value the customer perceives. By definition, that perception takes place in the customer’s head. Research by Marketing Professor Alexander Chernev of Northwestern University’s Kellogg School of Management and cited in Forbes suggests … Read More
Lessons in Value-Based Pricing
Perhaps the ultimate in value-based pricing comes from hedge funds (where else?). Hedge funds purport to offer a “sure bet” on the market, using hedges to protect against downturns in any particular area. In reality, hedge funds are a largely … Read More
Pricing Always Comes Back to the Market
Ever wonder how people figure out cost-of-living adjustments? People go and buy a representative “market basket.” Someone sent me this piece, thinking perhaps I could get to Italy to do some kind of pricing survey (it’s only for military personnel … Read More
No Relation Between Price and Quality?
Seth Godin posted this a couple of days ago: In industries under siege from external change (and I count music, books, airlines, pharmaceuticals, IT, telecommunications, etc) you’ll find that the extra fees extracted by the legacy companies DO NOT go … Read More
Learning from Buffett
In Berkshire Hathaways 2004 Annual Report, Warren Buffett talks about how to make money in the highly commoditized insurance business. In short, you underwrite business you think will be profitable, not business that is simply available. You do this by … Read More
Why Low Prices May Miss the Mark
There’s nothing like humor to get a point across. Dilbert is usually the king of office humor, but this Foxtrot strip says something important about how we often think about pricing.