AI is changing the nature of the pricing game. But pricing is a special kind of game with unique characteristics that make designing pricing AIs a challenge. In this article, the author explores the elements and contributing factors of the pricing game and explains the critical capabilities pricing AIs need to have in order to be successful.
In this article, the authors present a unified pricing theory, manifested in a tool called the Strategic Pricing Hexagon, that brings together all the disparate pricing ideas, and the drivers and forces behind them, into one master structure. This article shows how the Strategic Pricing Hexagon allows leaders to look beyond the numbers and develop a pricing strategy that can change the entire trajectory of their business and their market.
Why do people disagree on what prices to charge? Because pricing is a game, in the game-theory sense, and by definition a game cannot be solved. In this article, the author explores why we might be startled, even shocked, by disagreements when making pricing (and related) decisions, using over 16 billion simulated futures from the Top Pricer Tournament™, based on pricing strategies submitted by 2,239 executives, managers, consultants, students, and professors.
Charging different prices is often fairer than charging everyone the same price. While there are no standard answers to the question of what makes a price fair, business leaders can embrace market transparency, understand what drives the perceptions of fairness in their market, and ensure that they offer prices that customers will perceive as fair. With the right understanding and the right approach, companies can vary prices in ways that mutually benefit themselves and customers, and perhaps society as well, as the author explains.
This article is a sneak peek at Per Sjofors’ upcoming book “The Price Whisperer.” You can order a copy here. This book explores the complex network of variables that regulate customer perception of price and value, that is, why people buy one product and not another. By isolating key factors that determine a target market’s willingness to pay, businesses can effectively hack their existing model, thereby increasing asking price and sales volume.
In this article, the author explains the psychological phenomenon of “loss aversion” and how it can be applied in pricing strategy. Raymond Augustin is a recognized thought leader, specializing in pricing strategy. He has, as the COO of Virtual Procurement Services (VPS), provided guidance to dozens of healthcare organizations and tribal gaming operations on purchase price methodology and analytics.
Elasticity can be a powerful tool in the kit of a pricer, but used without critical thinking, it can be a very dangerous one, reinforcing bad behavior and even precipitating price wars. While elasticity is a very useful concept, it should be utilized with care for three reasons, as the author explains.
Stephan M. Liozu is Chief Value Officer of the Thales Group (www.thalesgroup.com). He is also an Adjunct Professor & Research Fellow at the Case Western Research University Weatherhead School of Management. He holds a Ph.D. in Management from Case Western Reserve University (2013), is a Certified Pricing Professional (CPP), a Prosci® certified Change Manager, and a Strategyzer Business Model Innovation Coach. He authored three books, Dollarizing Differentiation Value (2016), The Pricing Journey (2015) and Pricing and Human Capital (2015). He sits on the Advisory Board of LeveragePoint Innovation and of the Professional Pricing Society. He is a Strategic Advisor to 360pi, The Kini Group, and PriceSenz. He can be reached at sliozu@gmail.com.
Stephan M. Liozu is Chief Value Officer of the Thales Group (www.thalesgroup.com). He is also an Adjunct Professor & Research Fellow at the Case Western Research University Weatherhead School of Management. He holds a Ph.D. in Management from Case Western Reserve University (2013), is a Certified Pricing Professional (CPP), a Prosci® certified Change Manager, and a Strategyzer Business Model Innovation Coach. He authored three books, Dollarizing Differentiation Value (2016), The Pricing Journey (2015) and Pricing and Human Capital (2015). He sits on the Advisory Board of LeveragePoint Innovation and of the Professional Pricing Society. He is a Strategic Advisor to 360pi, The Kini Group, and PriceSenz. He can be reached at sliozu@gmail.com.
In this article, the authors examine the driving forces behind the steadily growing Chinese used car market, and analyze the four distinct business models that exist currently in the Chinese O2O (online-to-offline platform) market. This country and industry specific article provides valuable insights to pricers in multiple industries, and especially to those working in international markets.