The Dark Art of Pricing: Deliberately Pricing for Profit

by Andrew Gregson

Overview

Get your hands on the pricing strategies big businesses already use. For many business owners, the process of determining how to price products or services is akin to boiling eye of newt in a cauldron surrounded by wicked witches. But pricing is not magic, any more than selling is magic. The Dark Art of Pricing demystifies pricing for small- to medium-sized businesses. Pricing should be of the utmost importance to business owners because it is possible to use price strategies to engineer a deliberate profit. It is possible to drive sales and cut costs. An accountant can tell you how to cut costs. Sales trainers can help you improve sales. But what is often mostly ignored is pricing, and focusing on price allows you to find that sweet spot where you become the price leader because you are the best in your industry or area, and the go-to company because of the value you offer. Finding the right pricing strategy is, like developing a sales program, work. It takes testing and tweaking. But the “how” and “why” are buried in corporate vaults and academic journals, almost inaccessible to the average business owner. Author Andrew Gregson has started and owned five businesses including two franchises, and spent years consulting on profitability to small- and medium-sized businesses in North America. He simplifies the strategies that help business owners find ways to charge what they are really worth, drive larger profits, build wealth, and eventually attract buyers when the time comes to retire to a sandy beach.

Product Details

ISBN-13:	9781770405028
Publisher:	Self-Counsel Press, Inc.
Publication date:	10/15/2019
Series:	Business Series
Sold by:	Barnes & Noble
Format:	eBook
Pages:	144
File size:	3 MB

About the Author

Andrew Gregson, BA, MA, also has an M.Sc. in Economics. He has over 3 decades of business experience as a senior manager, consultant, and business owner and he has worked in the wholesale, distribution, manufacturing, and service sectors all over North America and the UK. Andrew is a profit engineer and pricing expert. His advice is based upon being a former business owner and entrepreneur. Andrew is also the author of Pricing Strategies for Small Business and delivers pricing talks to universities, colleges and businesses.

Table of Contents

Preface xv Introduction: Why Is Pricing Important? xvii 1 The Quick Fix 1 2 How to Present Your New Prices (Or, How to Sell Your Dream Price) 3 1. Prepare for Sticker Shock 3 2. Deal with Objections You Know about Early and Head-on 4 3. Keep Your Price to the End 4 4. Start with a Big Ask 4 5. Frame Your Price 5 6. The Power of Ten 5 7. Paint a Picture in Vivid Primary Colors 6 8. Make the Customer Open, If You Can 6 9. Make the Buyer Work Hard 8 10. Sandwich Your Price between the Benefits 8 11. Try to Make Your Price Nonnegotiable 9 12. The Cost Penalties of Not Buying 9 vi The Dark Art of Pricing 13. Don’t Squeeze Too Hard Against the Weaknesses 9 14. Let the Customer Win Something 9 15. Laugh Your Way to Your DREAM Price 9 16. Don’t Email 10 17. Price in Ranges 10 18. Be Persistent 10 3 Pricing for Start-ups (and Beyond) 13 1. Provide What the Market Wants; Don’t Start by Finding a Market after You Have Made the Product 14 2. Customer-Driven Pricing 14 3. It Is Not about Sales, It Is about Profits 16 4. Customer Loyalty and Its Role in Your Pricing 17 5. Choice and Niche Markets: A Profit Opportunity 20 6. Price in Threes (a.k.a., Good, Better, Best Pricing) 21 7. Decision Fatigue: Analysis Paralysis and Its Role in Pricing 22 8. Bad Customers Drive out Good Customers 26 9. Wrapping It All Together 28 4 Positioning for Price (The Role of the Unique Selling Proposition) 29 1. How Do You Use a Unique Selling Proposition? 29 2. Step 1: Dissect Why You Originally Decided to Sell Your Widgets or Services 30 3. Step 2: Unearth Those Customer Benefits 32 4. Step 3: Analyze Your Customer 33 5. Step 4: Examine the Customer Cost Variables 34 6. Step 5: Use the Power of Ten 35 7. Step 6: Make the Customer’s Choice Easy 36 8. Step 7: Exploit Perceived Value 37 9. Step 8: Who and When Is Your Customer? 37 10. Step 9: Think Like a Customer 38 11. Using your USP to Position for Price 39 5 Value Pricing 43 1. What Is Value Pricing Exactly? 44 2. Applying Value Pricing: Pricing on Purpose 46 Contents vii 3. Value Pricing Is Tip Pricing 46 4. Value Pricing Is Tip Pricing: Accounting 48 5. Value Pricing for Distributors 49 6. Pricing for Value 49 6 Pricing and Branding 51 7 Pricing Strategies Based on Customer Behavior(s) 55 1. Reference Pricing 55 2. Proportional Price Evaluations 57 3. Perceived Fairness 58 4. Price Dripping 59 5. Gain-Loss Framing 60 6. Gender Differences in Pricing 60 7. Prospect Theory 61 8. Using Customer Behaviors to Benefit Your Profits 62 8 The Failure of Conventional Pricing 65 1. WAG, SWAG, and STICK Methods 65 2. Cost-Based Pricing 67 3. Margin Pricing 68 4. Risk and Return 69 5. Don’t Be Afraid to Charge What You Are Worth and Change How You Do Things 72 9 Successful Pricing Strategies 75 1. Price Optimization 75 2. Seven Questions for Price Optimization 76 3. Optimizing Pricing for Limited-Time and/or Limited-Inventory Offers 76 4. Activity-Based Costing (ABC) and Activity-Based Pricing (ABP) 77 5. Dynamic Pricing (Surge Pricing) 80 6. Data and How It Gets Used to Generate Profits 82 7. Price Skimming: Lessons in Pricing from Apple 83 8. Pocket Price Banding 84 9. Bundling and Unbundling 85 10. What Now? 87 viii The Dark Art of Pricing 10 Retail Pricing 89 1. The Most Effective Pricing Strategies 90 2. Discounting and Sales 91 3. Steps in Promotional Discount Pricing 92 4. Going from Analysis to Action: Implementing a Price Increase 92 5. Price Lining 96 6. Odd Pricing 97 11 Pricing Conclusions and Steps to Profit 101 1. Sell Your Price and Reap the Benefits 101 2. Stop Discounting: It Kills Profits 101 3. Cut Your Price Waterfall Costs 102 4. Spend Time Developing Your USP and Branding 102 5. Pay Obsessive Attention to Customer Service and Quality 102 6. Develop a System to Review Your Prices and Apply Frequently 102 7. Build, Track, and Analyze Your Data 102 8. Keep Going 104 12 How to Price: A Workbook Approach 105 1. Step 1: Make a Decision to Position Your Company 105 2. Step 2: Pick a Niche Market 106 3. Step 3: Put Value First and State It 106 4. Step 4: Frame Your Price around Your Competitors’ Prices 106 5. Step 5: Create Your Dream Price 107 6. Step 6: Collect Data 107 7. Step 7: Be Aware of Your Marketing Environment 110 8. Step 8: Don’t Be Afraid to Experiment 111 13 True-Life Business Scenarios 113 1. Pocket Price Banding: Castle Battery Company Case 113 2. GENERIC Truck and Diesel Ltd. “Re-setting the Clock” 117 Download Kit 123 Contents ix Checklists 1 Optimized Pricing 77 2 Steps to Running Promotional Discount Pricing 93 Worksheets 1 Sell Your Price 12 2 Find the Minimum Viable Price 23 3 Develop Your Three Prices 24 4 Develop Your Unique Selling Proposition 40 5 Figure out Your Value 47 6 Position Your Price 73 7 Seven Questions for Price Optimization 78 8 Retail: How to Have a Sale 98 9 The Price Waterfall (or How Profits Drain away) 103 10 Strategic Considerations 109