Getting Price Right: The Behavioral Economics of Profitable Pricing

by Gerald Smith

Overview

Winner, 2022 Leonard L. Berry Marketing Book Award, American Marketing Association

How do leaders, managers, and proprietors go about the essential task of setting prices? What biases enter into this process, and why? How can a business debias its price setting to become more productive, strategic, and profitable?

Combining perceptive insights from behavioral economics with leading-edge ideas on price management, this book offers a new approach to pricing. Gerald Smith demonstrates why understanding, reframing, and refining everyday pricing processes—a firm’s or manager’s pricing orientation—results in a better long-term pricing strategy. He explores how pricing actually happens in practice and shows how to identify and remove the psychological blinders that cause suboptimal decisions and policies. Smith details how to improve pricing orientation by combining the soft behavioral skills that intuitively shape and refine pricing practice with the hard analytic skills that guide and structure pricing strategy. The result is more rational and more profitable pricing—with respect to not only revenue and profitability but also employee productivity and customer satisfaction.

Offering an accessible and actionable model, Getting Price Right is the first book to apply behavioral economics to managerial price setting. It is a must-read for corporate business leaders, thought leaders, and professionals interested in advances in pricing and for managers, entrepreneurs, proprietors, and small and midsize business owners whose everyday work involves pricing.

Product Details

ISBN-13:	9780231549073
Publisher:	Columbia Business School Publishing
Publication date:	10/12/2021
Sold by:	Barnes & Noble
Format:	eBook
File size:	6 MB

About the Author

Gerald Smith is a business professor and chair of the Marketing Department at Boston College in the Carroll School of Management. An award-winning instructor, he teaches strategic pricing management in the BC MBA Program. He is the author of The Opt-Out Effect: Marketing Strategies That Empower Consumers and Win Customer-Driven Brand Loyalty (2016) and editor of Visionary Pricing: Reflections and Advances in Honor of Dan Nimer (2012). Smith has lectured widely in leading executive forums and consulted, researched, and worked with many Fortune 1000 business managers, small and medium businesses, and government entities.

Table of Contents

Preface
Part I. Behavioral Economics of Everyday Pricing Decisions
1. Pricing Orientation | Pricing Strategy
2. Framing and Strategic Frames of Reference
3. Psychological Pricing Orientation: Psychological Price-Setting Bias and Skills
4. Social Pricing Orientation: Cultural Price-Setting Bias and Skills
Part II. Behavioral Economics of Cardinal Pricing Orientations
5. Cost-Driven Pricing Orientation Biases and Skills
6. Customer Value–Driven Pricing Orientation Biases and Skills
7. Customer Willingness-to-Pay–Driven Pricing Orientation Biases and Skills
8. Competition-Driven Pricing Orientation Biases and Skills
9. Balanced Pricing Orientations, Profitable Pricing Strategy
Notes
Index

Editorial Reviews

This book makes a strong contribution to pricing knowledge by bridging the bodies of pricing and behavioral science with a unique focus on pricing orientation. It proposes a comprehensive and structured review of critical concepts with practical recommendations and examples on how to use them in real business life. This is a must-have book for any pricing practitioner’s library.

Stephan M. Liozu

Pricing continues to be one of the most powerful yet underused strategic levers to drive sustainable earnings growth. Gerald Smith offers great insights into what gets in the way and provides actionable guidance on how to understand, reframe, and refine everyday pricing processes to drive superior financial outcomes and customer satisfaction. A must read for anyone looking to unleash the power of strategic pricing!

Gagan Chawla

Smith shines light on the psychological biases that have long made pricing as much art as science. Drawing the link between behavioral economics and pricing theory, he explains how to take advantage of the quirks that motivate consumers to, for example, pony up for a subscription to shave “butter” instead of buying cheaper shaving cream at the drugstore. At the same time, Smith uncovers the competing magnetic forces that explain why finance, marketing, and accounting managers each seem to approach pricing problems from a different planet and how to optimize among their competing influences in the organization. Getting Price Right steers new managers through the foundations of profitable pricing while offering new tricks for experts in readable prose with intuitive examples.

Samuel Engel

This is the most important pricing book to come out in the past twenty years. It provides the most thorough collection of alternatives for setting up the “just-right” department, complete with strategic objectives and tactical detail. For any executive who wants to build or evaluate an existing pricing department and for students of pricing, Smith’s book is truly a master class.

Reed K. Holden

With Getting Price Right, Gerald Smith provides an accessible and perceptive look at the behavioral elements of pricing strategy.

Hermann Simon

An insightful and engaging integration of behavioral theory and pricing practice.

Thomas Nagle

There are introductory books available for people new to pricing and higher-level books for people who want to get into the theory of pricing and analytics. What has been missing is an advanced pricing strategy book that connects practical everyday pricing approaches with academic scholarship. Gerald Smith has done just that. This is an excellent read for all pricing stakeholders looking to better understand how pricing fundamentals like customer value and willingness-to-pay intersect with the evolving science of behavioral economics.

Kirk Jackisch

For any business owner or manager, Getting Price Right is a must-read. Gerald Smith is one of the preeminent voices in the field of pricing, and this book delivers, demonstrating why understanding, reframing, and refining pricing strategy in a rapidly evolving marketplace results in better profitability and customer and consumer satisfaction.

Eric Nyman