A few more pricing ideas to get you to the next level...

Hi!

Part 3 of my pricing basics!

How did you like the first two parts?

Today, I’m going to share a few more advanced pricing concepts with you to help turbocharge your price thinking…or, at least get it a little further down the road.

The Pricing Thermometer: created by some smarties at HBS, this model is a simple tool that helps you maximize your pricing by focusing on COGS, maximum economic value, and perceived value so you can have a visual representation of where your pricing can be.

I’ve drawn y’all a picture before, but here you go again:

Dynamic Pricing: This is a concept used by hotels, airlines, and some ticket sellers among others to help capture the maximum profit by adjusting the prices based on time of day, season, time of year, or some other factor.

The challenge here is that while you capture more of the value, you also don’t typically gain a lot of brand loyalty and you can make your customers feel like you think of them as commodities.

Cost Plus Pricing: Not my favorite, but if it is all you got…it is better than nothing at all.

This is where you take your costs and add a percentage on top for your profits.

Where this fails is that you usually don’t actually factor in all of the costs like marketing, sales, or storage.

The truth with these is that they are helpful to keep in mind because in too many places, the pricing decision is yanked out of thin air…and that’s the worst form of pricing going.

Next week, maybe we will move on to brand management.

Dave