Hermann Simon, Founder and Honorary Chairman of Simon-Kucher & Partners, recently released his autobiography: “Many Worlds, One Life.” The book describes Dr. Simon‘s journey through many worlds, including how pricing became his vocation, how he built the global market leader Simon-Kucher, and how became fascinated by the Hidden Champions. The following is an excerpt from the book: Chapter 9 – “The Seductive Power of Price” – in which he outlines the experiences that led him to pricing. These insights will be helpful to pricers at every stage of their career who are seeking advice on how to grow and succeed in the pricing discipline. He can be reached at hermann.simon@simon-kucher.com.

The Journal of Professional Pricing, June 2021

Chapter 9. The Seductive Power of Price

Hog-tied by hog prices

Already in my childhood, I had visceral first-hand experiences with the power of price. When our hogs were ready for slaughter, my father would bring them to the local wholesale market, where they would be auctioned off to butchers or traders. The sheer number of farmers who brought their hogs to market, matched by the large number of butchers and traders on the “buy” side, meant that no individual buyer or seller had a direct influence on the price of the hogs. We were at the mercy of the local cooperative, which cleared the transactions. They would tell my father the price he would receive, and thus determine how much money he could take home to our family.

The same applied to milk, which we would deliver to the local dairy. We had absolutely no influence on the price. The dairy, again part of a cooperative, told us what the price would be. The milk price would fluctuate based on supply and demand. The market for young hogs had a similar dynamic. That market was held every two weeks in Wittlich, and we would go there on our horse-and-wagon. In times of oversupply, prices would plunge.

In every market my father went to, we were “price takers.” We had to accept the set price, whether we liked it or not. It was an extremely uncomfortable position. As anyone with a similar experience will attest, money is tight on a farm. These sales were our only source of income.

I absorbed all these impressions as a boy and, I must admit, I didn’t like them. Decades later, I would explain in interviews that these lessons taught me something that has guided me in running my own business and helping others improve theirs: never run a business in which you have no influence on the prices you charge.^[1]

I won’t claim I articulated those thoughts exactly that way in the 1950s as a young boy. But I have that same visceral feeling today whenever I think about the price of pork or buy a gallon of milk. I am rather certain that these childhood experiences shaped my opinions about how businesses operate. To this day, I don’t think much of a business that doesn’t make money.

Despite my remarks about prices for our hogs and our milk, money played a secondary role in our lives during my childhood. Self-sufficiency was the priority, and neighbors helped neighbors without any formal “price” mechanism in effect. The money-based part of our economy was small. Nowadays, prices are pervasive. They are inescapable. You see them everywhere, sometimes in unexpected or troubling roles. An important question we all wrestle with is how much these market forces – and with them, prices – will take over even more aspects our lives. This makes it all the more important for us to understand how prices and pricing mechanisms work.

The magic and mystery of price

Prices are the central hinges of a market economy. Everything revolves around prices. Prices help balance supply and demand. In typical industrial constellations, price is the strongest profit driver. But at the same time, no other marketing instrument is better suited to increase sales volumes quickly and effectively than price cuts. In highly competitive markets, price is a manager’s weapon of choice, the most frequently used form of aggression. That’s why price wars are the rule rather than the exception in many markets, often with devastating effects on profits.

Discounts and price promotions – two standard forms of price cuts – are an everyday occurrence in retail, but they seem to occur with increasing frequency and depth. In one of the world’s largest beer markets, some 70 percent of all beer sales at the retail level take place on promotion, with discounts as high as 50 percent. ^[2] Managers tend to have a fear of prices, especially when they need to increase them. The fear has one legitimate source: one can never know with absolute certainty how customers will react to a price change. If we raise prices, will customers remain loyal or will they run in droves to the competition? If we cut prices, will they really buy more? Such questions make managers very uncomfortable. When in doubt, they will keep their hands off the pricing lever and turn their attention instead to something more tangible and more certain: cost management, or more precisely, another round of cost-cutting. But I have never kept my hands off of pricing. Pricing became my calling and my life’s work.

How price seduced me

Price would become my lifelong companion. In college I was fascinated by Professor Wilhelm Krelle’s lectures on pricing theories. They were mathematically elegant and often very complex. These challenging lessons gave me a solid set of ways to think about price problems, structure them, and solve them. They would become one more essential building block to my understanding of how pricing works. But I would have never for a moment thought that this knowledge would have some kind of practical application.

Pricing became an emotional experience when I met Professor Reinhard Selten, who would go on to win the Nobel Prize in Economics in 1994 for his work on game theory. Prof. Selten conducted a pricing experiment in class with real money at stake – a true innovation! He offered a prize of $100. One “A” player and four “B” players could divide this money up among themselves if they could form a coalition that lasted at least 10 minutes.

Player A could form a coalition with two B players or the four B players could join together. I was Player A, and after a lot of back-and-forth with shifts in the coalitions, I managed to get one that lasted the required 10 minutes. Two B Players each received $20 and I pocketed the remaining $60. This vividly clear experiment taught me that price is always about how people divide up value.

Eight years later, I became a colleague of Prof. Selten at the University of Bielefeld. To this day he remains the only German to win a Nobel in economics. His experiment was one of the highlights of my studies.

After passing my exams, my university studies continued seamlessly, with price becoming a common thread. It turns out that my dissertation Price Strategies for New Products changed the course of my life.^[3] During my time as Prof. Albach’s assistant, I worked on several expert analyses that dealt with pricing-related issues. That work gave me my first glimpse into how pricing works at large companies. It struck me that there was a lot of improvement potential.

During my time as professor at Bielefeld (1979–1989) and Mainz (1989–1995), I assigned many master’s theses and dissertations in that field. Every area of price management we explored seemed to generate more questions. All of this work combined to advance and expand the base of knowledge around price management. In addition to my teaching activities at Bielefeld and Mainz, I conducted classes and gave talks on price management at universities, business schools, and management conferences throughout the world. It was as if pricing was slowly but surely awakening from a deep sleep.

When I visited Philip Kotler at Northwestern University, he referred me to someone in Chicago named Dan Nimer, who called himself a “price consultant.” His work was practice-oriented and he seemed to be making a good living at it. The thought of a “price consultant” in that sense was a completely foreign concept to me at the time. Nimer sent me some of his articles, and the differences between his publications and the theoretical papers I’d read and written in my academic career could not have been more striking. The scientific papers on price in the academic world were long on theory but devoid of practical advice. In his early years, Nimer formulated a sentence whose validity has stood the test of time: “The job of pricing is not to earn back costs, but to capture the perceived value of a product.”^[4]

I would see Nimer on occasion in the ensuing years. In 2012, members of the pricing community honored this visionary of pricing with a voluminous book of almost 400 pages for his 90th birthday. ^[5] But he was by no means retired. He still lectured on pricing and advised clients. Dan Nimer passed away on January 9, 2015.

I also had many interesting discussions about pricing with the world-renowned management thinker Peter Drucker, who encouraged me in my pursuit of the goal of finding practical applications for pricing theory and research.

“I am impressed by your emphasis on pricing,” he once told me. “And I think it will be a while before competitors catch up with you. Price is totally neglected in marketing. Pricing strategy today is little more than guesswork.”^[6]

Pricing intrigued Drucker from an economic and also from an ethical perspective. He understood profit to be the “cost of survival” and sufficiently high prices to be a “means for survival.” Drucker always tried to strike a clear ethical balance. He warned against the abuses of market power. He commented on price transparency and advocated fair behavior. Shortly before his death in 2005, he provided a testimonial for Manage for Profit, Not for Market Share, a book which I co-wrote with my partner colleagues Frank Bilstein and Frank Luby: “Market share and profitability have to be balanced and profitability has often been neglected. This book is therefore a greatly needed correction.” ^[7]

Since my dissertation I have remained true to the topic of pricing and concentrated my research on it. For the title of my first textbook, published in 1982, I coined a new term: price management.^[8] I had dwelled on potential titles for a long time. At the time, the term “price management” was unique in German as well as in English. As far as I could tell, no one had used it before, but it also did not trigger a lot of spontaneous acceptance. Up to that time, the common terms in the pricing vernacular were “price theory” and “price policy.” Price theory was the field that I learned thanks to the theoretical emphasis at the University of Bonn. Price policy covered the more practice-oriented content, but it was qualitative, akin to an oral history passed down from generation to generation. Such qualitative statements do not provide much to go on. At the end of the day, a price is a number, which means it is a quantitative term. With the term “price management,” I aspired to integrate these seemingly incompatible worlds by making the quantitative, theoretical concepts both accessible and useful so that businesspeople could make better pricing decisions.

The first edition of my textbook was quite the tome, with 483 pages. The second edition in 1992 reflected a complete overhaul of the content as well as the addition of a sub-title: “Analysis – Strategy – Implementation.” The book’s size grew accordingly to 740 pages. A few years later, I shifted away from the textbook format and collaborated with Bob Dolan on a trade publication aimed primarily at managers. We jointly published the book Power Pricing in 1996 and it continues to sell well to this day.^[9]

In 2008, I published the third edition of Preismanagement with Professor Martin Fassnacht as co-author. His involvement would ensure that the book reflected the current state from the academic side, which I was no longer as close to as in the past. He and I formed a rare combination for textbook authors, because we merged the practical side – where I had spent the previous 13 years – with the academic side. In 2011, the third edition won the Georg Bergler Prize in Germany for the best marketing textbook. In 2016, we prepared the fourth edition, which explored the effects of digitalization much more thoroughly than the previous three editions, and in 2019 the updated and expanded English language version Price Management was published by Springer, New York.^[10] My various pricing books have been translated into more than 20 languages.

Imitation is the sincerest form of flattery, as the saying goes. But when imitation crosses the line legally and ethically, it is not very flattering. We experienced that feeling first-hand in 2010 when a well-known German publishing house released a book with the same name: Preismanagement. The author was an established professor in Germany whose name I will not mention.

Due to the comprehensive “overlaps” with our book, the copycat book was removed from the market at the end of 2010. Its publisher recognized our rights to title and agreed to refrain from publishing or distributing any books that violate those rights. My lawyer also sent a cease-and-desist letter to Amazon’s German operations, because the book was still available there. Amazon complied immediately.

Pretium – the legacy of the Ancient Romans

People have asked me countless times to name the most important aspect of pricing. I answer with one simple word: “value.” More precisely, the answer is “value to customer.” The price a customer is willing to pay, and therefore the price a company can achieve, is always a reflection of the perceived value of the product or service in the customer’s eyes. If the customer perceives a higher value, his or her willingness to pay rises. The converse is equally true: if the customer perceives a lower value relative to competitive products, willingness to pay drops. “Perceive” is the operative word. When a company tries to figure out the price it can achieve, only the subjective (perceived) value of the customer matters. The objective value of the product or other measures of value, such as the Marxian theory that value is defined by the human labor time invested, matter only to the degree that the customer thinks they matter and is willing to a pay a price in return.

The Ancient Romans understood this connection so well that they incorporated it into their language. In Latin, the word “pretium” means both price and value. Literally speaking, price and value are one and the same. This is a good guideline for businesses to follow when they make their price decisions. It leaves managers with three tasks:

• Create value: The quality of materials, performance, and design all drive the perceived value of customers. This is also where innovation comes into play.
• Communicate value: This is how you influence customers’ perception. It includes how you describe the product, your selling proposition, and last but not least, the brand. Value communication also covers packaging, product performance, and shelf or online placement.
• Retain value: What happens post-purchase can be decisive in shaping a lasting, positive perception. Expectations about how the value lasts will have a strong influence on a customer’s willingness to pay for luxury goods, consumer durables, and cars. The price of Porsches or Ferraris may actually increase over time.

Sellers should start the process of setting prices only after they are clear about the perceived value of the product or service. At the same time, customers must also develop a keen awareness of value. The customers’ best defense against getting ripped off or overpaying is to understand the value of what they are buying. Knowledge of value also helps the customer avoid buying a “lemon,” which is a product that appears to be a bargain at first glance but turns out to be a bad deal. ^[11]

The wisdom of the famous Spanish philosopher Baltasar Gracian (1601-1658) captured that sentiment perfectly: “Better be cheated in the price than in the quality of goods.” ^[12] It is very frustrating to pay more than you should have. But the anger over this form of “rip off” often fades if the product gets the job done well. Worse is the situation when the product is flawed. The frustration stays with you until you finally use up the product or get rid of it. The moral here is that one should not lose sight of quality in pursuit of a better deal. Admittedly, that is easier said than done. The price itself usually has one dimension, or a small number, whereas the quality of a product or service is a function of many variables and is therefore harder to assess.

The French have a similar saying to Gracian’s: “Le prix s’oublie, la qualité reste.” Loosely translated, it means that the quality you bought endures long after you have forgotten the price. Prices are often ephemeral and quickly forgotten, while impressions of value and quality last much longer. Who has not hastily celebrated capturing a bargain or paying a low price, only to find out later that quality was poor and the bargain an illusion? Conversely, who has not at least once complained about paying a high price and then been pleasantly surprised when the quality turned out to be excellent? The English social reformer John Ruskin (1819– 1900) described this insight succinctly: “It is unwise to pay too much, but it is worse to pay too little. When you pay too much, you lose a little money— that is all. When you pay too little, you sometimes lose everything because the thing you bought was incapable of doing the thing you bought it to do. The common law of business balance prohibits paying a little and getting a lot— it cannot be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”^[13]

I must confess that I learned this lesson the hard way. The farms in my home village were so small that two or three farmers needed to share a reaping-and-binding machine. That also meant that we all needed to help each other with our harvests. When I was 16, I had had enough of this time-consuming routine and decided to do something about it. My family would become independent. Without asking my father, I spent $600 – almost $5,000 in 2021 dollars – on a second-hand reaping-and-binding machine. The price seemed very reasonable, and I was proud to have found such a bargain! Then we used it for the next harvest and quickly made a frustrating discovery. The machine used a new and unfamiliar system, which proved unreliable in practice. The damn thing kept breaking down. So much for my bargain! The frustration dogged us for two years, before we scrapped the machine for good. I had learned my lesson.

I wonder if governments and their agencies – who generally award contracts to the lowest bidder – are aware of that French saying or Ruskin’s comment. I’m reminded of a remark that Alan Shepard – the first U.S. astronaut in space – once made when asked about whether he ever felt fear in a space capsule. He admitted that he once thought to himself “My God, just think, this thing was built by the lowest bidder.”^[14]

Price moves into unchartered waters

In the past, many goods and services had no prices. The use of streets was free, going to school cost nothing, and many services came with an all-inclusive price. Governments, churches, and charities delivered goods and services at no charge, because it would help others or because charging a price would be considered immoral or taboo. But that is changing rapidly.

In his book What Money Can’t Buy: The Moral Limits of Markets, Harvard philosopher Michael J. Sandel reports that prices are creeping into all realms of our lives.^[15] The airline Easy Jet charges passengers $16 to be among the first to board the aircraft. It costs a foreigner $14 to enter the United States. That is the price of an entry into ESTA (Electronic System for Travel Authorization). In some countries you can pay extra during rush hour to travel in exclusive lanes, with the prices dependent on the current traffic.

So-called “market designers” recommend general traffic pricing systems that apply to all roads. They estimate the cost of the current levels of traffic congestion at $1 trillion. Modern technologies make it possible to monitor and price the usage of roadways based on real-time scarcity. Some authors see this as “an inevitable future” in order to make the usage of roadways more efficient. According to their study of expressways in Singapore, the introduction of such a system increased the average speed from 19 to 42 miles per hour.^[16] The prices vary according to the traffic situation.

Other areas where prices have made inroads range from the creative to the unexpected. For a fee of $1,500 per year, some doctors in the U.S. offer a dedicated cell phone access number and 24/7 availability. In Afghanistan and other war zones, private companies paid mercenaries between $250 and $1,000 per day, with the price based on qualifications, experience, and the mercenary’s country of origin. In Iraq and Afghanistan, these private security and military companies had more people on the ground than the U.S. armed forces did.^[17] Moving further along the moral spectrum, one can pay a surrogate mother in India $6,250 to carry a baby to full term. If you want to immigrate to the United States, you can purchase that right for $500,000. Some universities are auctioning off scarce opportunities to enroll.

Someday many more things will have a price tag attached to them, as more and more of our lives and routines come under market and pricing mechanisms. This creep across moral and ethical boundaries is one of the most significant economic trends of our time. Sandel commented on this development. “When we decide that certain goods may be bought and sold, then we decide – at least implicitly – that it is appropriate to treat them as commodities, as instruments of profit and use. But not all goods are properly valued in this way. The most obvious example is human beings.”^[18]

The valuation of companies also poses a challenge and can lead to very high prices. In this context, I encountered the highest price I have personally experienced in my entire career. It was March 2, 2000 in Ludwigshafen, Germany. I was sitting in the office of Max Dietrich Kley, at that time the CFO of BASF, the world’s largest chemical company. BASF had recently sold its pharmaceutical unit – which it had bundled into the company Knoll AG – to Abbott Laboratories. Kley’s secretary came into the room and handed him a piece of paper. He looked at it and said that “this is the confirmation, the purchase price for Knoll AG, 6.9 billion Deutschmark, has been deposited into our account.” That sum corresponded to US$3.6 billion, an amount that no one would look at twice in today’s environment for mergers and acquisitions. But at that time, it was a gigantic sum of money.

The philosophy of price

After having spent my whole life dealing with prices, the idea arose to illuminate the concept of price from a philosophical point of view. We hardly ever link price-related activities to philosophy. What does philosophy have to do with price? Why should we look at something as ubiquitous and mundane as price from a philosophical standpoint?

It turns out that viewing price through the lens of classical philosophy reveals some very practical insights that can prevent us from making mistakes, both as buyers and sellers. What I refer to as the “philosophy of price” can:

• deepen our understanding of price and its effects
• keep us humble (many seemingly modern pricing concepts were first articulated by ancient philosophers)
• help us to solve difficult ethical pricing issues, such as in health care.

Socrates and Aristotle on price

The eternal equation “price = value” begs the question: “What is value?” The first known answers to this question come from the Greek philosopher Socrates (469-399 BC,) who said that “happiness does not come from ownership, but from the use of a product.”^[19] In contemporary terminology, we speak of “value-in-use.”^[20] We can therefore consider Socrates to be the father of a very modern concept, the sharing economy.^[21] In the sharing economy, one does not own a car, a bicycle, or an apartment; one uses it, often only for a defined period. The increasingly widespread implementation of the sharing economy is radically transforming entire industries.

Why was this revolutionary Socratic idea not implemented earlier? The answer is obvious. Transaction costs of sharing were too high prior to the arrival of the internet. Selling a car at $30,000 is one transaction. Sharing it in hourly increments means thousands of transactions over the life of a car. Offering a car on a per-hour basis or a bicycle on a per-minute basis requires an extremely efficient transaction process and the ability to bring together a critical mass of buyers and sellers. Neither is possible without the internet.

We owe more sophisticated insights on value and price to the Greek philosopher Aristotle (384-322 BC). He observed that value-in-use can vary among individuals. This is the basis for the ubiquitous price differentiation or price discrimination we experience today.^[22] Aristotle also noted that the value-in-use declines as the quantity of goods increases. This fundamental law is now known as Gossen’s Second Law, formulated in 1854 by Hermann Heinrich Gossen (1810-1857).^[23] This law is the foundation for non-linear pricing.^[24]

Aristotle also mentions that the value of a product can depend on the use of another product. This insight provides a rationale for multi-product pricing and for so-called price bundling. He also observed that the value-in-use will increase if the good can be consumed conspicuously, which leads us to the so-called Snob Effect: demand can actually increase as prices rise, because higher prices signal more prestige.

Thomas Aquinas on price

The concept of “just price” dates back to Thomas Aquinas (1225-1274).^[25] Today we use the term “fair price” in a similar sense. Aquinas looked at pricing from an economic and an ethical perspective. His ideas were strongly influenced by the Christian tradition against usury, and against interest in general. To raise prices in response to increasing demand was theft in his view. Aquinas also explicitly stated that charging higher prices in the wake of natural disasters is unethical.

This latter topic is highly relevant today, as illustrated by the report “Price Gouging After Hurricane Sandy: Immoral or Law of Supply and Demand.”^[26] It concerns the pricing for power generators during and after a 2012 hurricane in the U.S. Should the seller raise the price after a disaster? If the price is kept constant, the first buyers will buy several generators and resell them at a higher price. Is this just?

We can also look at the case of Uber after a terrorist attack in Australia in 2014. The demand for cars surged, and the Uber program automatically increased the surcharge.^[27] This makes economic sense, because the higher fees attract more cars to the site from which people want to flee. But that action drew a very negative response in the media. Uber now applies manual intervention if demand rises suddenly and sharply.^[28] In the case of a London terror attack in 2017, Uber refunded the passengers who had paid the surcharge.^[29]

Very innovative life-saving drugs are another example. Kymriah, a gene-based therapy offered by Novartis, heals a certain type of leukemia with one injection. What is a just price for this product? In the US, an application of this drug costs up to $475,000. In the UK, the National Health Service covers a price of 220,000 British pounds, but only for children. In Germany the price is €320,000.

Would a different price system be more just? One idea brought into the discussion is a refund if the treatment does not yield the promised effect. An alternative could be a price scheme where patients pay 50 percent of their annual income? A patient who earns $100,000 per year would pay $50,000. A patient who makes $2 million a year would pay $1 million. While such a system seems unrealistic at first glance, it is actually the basis for income taxes, which one can consider to be the price for government services.

Karl Marx on price

Are you a Marxist? You are likely to answer “no.” So my next question is: “OK, if you are not a Marxist, why is your pricing Marxian?” While Marx’s labor theory is totally rejected today, it has survived in pricing. What a strange phenomenon! Let me explain why that is the case.

The most important contribution of Karl Marx (1818-1883) was his labor theory of value, according to which only labor creates value. He writes that the “prices of goods are determined by wages.”^[30] Marx allows for differences in productivity and qualifications of workers, and thus for different values per unit of time. But the core of his theory is that only labor creates value. Consequently, labor costs are the sole base for price calculations.

In modern terminology we call this method “cost-plus pricing.” Based on my decades of observations around the world, I would claim that 80 percent of all prices in today’s markets are primarily determined on the basis of costs. And all costs are labor costs. Lawyers, consultants, and most other service providers charge prices for their time (hourly, daily, monthly rates). If an automotive company buys parts from a supplier, these parts carry labor costs up the value chain.

On subjective value

The so-called subjective value theory, which is generally but not universally accepted today, could be expressed as “value is in the eye of the beholder.”^[31] This is also not new. Publilius Syrus, who lived in the 1^st century BC, said: “Everything is worth what a buyer will pay for it.” What is this theory’s implication for pricing? It is “value extraction” or, in the modern internet vernacular, “monetization.”^[32] These terms encompass all variants of price differentiation or price discrimination, across customers, across product variants, across space and time.^[33] The internet has radically improved the opportunities for price differentiation due to much better data and much lower costs of implementation.

However, there is a strong and increasing opposition against “value extraction.” Professor Mariana Mazzucato from the London School of Economics is one of the outspoken critics. “Things are only getting worse,” she writes. “‘Rent seeking’ refers to the attempt to generate income, not by producing anything, but by overcharging above the ‘competitive price,’ and undercutting competition by exploiting particular advantages, or blocking other companies from entering an industry, thereby retaining a monopoly advantage.”^[34] Her views are seconded by Nobel laureate Joseph Stiglitz, who blames weak regulation and monopolistic practices for “rent extraction.”

A related key question is whether there is a level playing field between consumers and increasingly sophisticated sellers. I think there is. The reason lies in the much higher price and value transparency the internet provides. Today’s consumers have all kinds of price comparisons at their fingertips. The same increasingly applies to value transparency thanks to widely-used customer feedback mechanisms. Marshall McLuhan’s “global village,” first described in 1962, has become reality. Understanding value creation and delivery on the one side and value extraction (or monetization) on the other side becomes critical for buyers and sellers.

Prices and the Divine

Who makes prices? According to the book The Mantle of the Prophet, the following applies: “Information about prices is the quickening breath that sustains the life of the bazaar, and the mechanism by which these prices adjust to new information on supply and demand is so refined as to seem almost divine.”^[35] This statement recalls Adam Smith’s invisible hand.

Philosophy helps both buyers and sellers to understand pricing challenges better. Many concepts which seem current and modern actually have ancient philosophical roots. But their implementation has only become possible thanks to modern information technology and Big Data analysis.

My path to pricing … at a glance

My focus on pricing began with graduate studies and my doctoral dissertation in the early 1970s. At that time, there is no way I could have mapped out where my future in pricing would lead. But pricing became a lifelong, increasing intensive pre-occupation. One can say without any exaggeration that Simon-Kucher has created and continually developed the market for price consulting. The following table provides an overview of the milestones along my personal path through the world of pricing. It took many many small steps.

Period/Year	Milestones and experience	Key influencers
1960-1966	Experience in pricing for agricultural goods on my parents’ farm	Father
1969-1973	College, especially lectures and the textbook Preistheorie (Price Theory)	Prof. Wilhelm Krelle
1972	Price negotiation experiment with a future Nobel Prize winner	Prof. Reinhard Selten
1973-1976	Dissertation “Price Strategies for New Products.”	Prof. Horst Albach
1977	Expert analyses on price competition	Prof. Horst Albach
1978-1979	Research at the Massachusetts Institute of Technology; diverse articles on pricing topics	Prof. Alvin J. Silk
1979	Meeting with Philip Kotler, who told me about the “price consultant” Dan Nimer	Prof. Philip Kotler Dan Nimer
1981	Course on price management at INSEAD, Fontainebleau
1982	Coining the term Price Management and publication of the first edition of a textbook with that title
1983	First consulting projects and talks on pricing topics (BASF, pharmaceutical industry)
1985	Founded the consulting firm UNIC Institut für Marketing und Management GmbH, which would later become Simon-Kucher & Partners	Dr. Eckhard Kucher Dr. Karl-Heinz Sebastian
1988-1989	Marvin Bower Fellow at Harvard Business School; publication of the English-language book Price Management	Prof. Ted Levitt Prof. Robert Dolan
1992	Completely revised second edition of Price Management (Germany) “
1993	Development of the BahnCard concept	Hemjö Klein Dr. Georg Tacke
1995	Assumed the CEO role at Simon-Kucher; ended my academic career
1996	Publication of Power Pricing with Robert J. Dolan, Harvard Business School.	Prof. Robert Dolan
2002	Business Week magazine refers to Simon-Kucher as the world market leader in price consulting
2008	Third edition of Price Management (German version) with Martin Fassnacht (WHU) as co-author	Prof. Martin Fassnacht
2009	Retired as CEO of Simon-Kucher
2012	Publication of Preisheiten, a sort of biography about pricing. The English version Confessions of the Pricing Man came out in 2015
2016	Fourth edition of Price Management (German version) with Martin Fassnacht (WHU Koblenz) as co-author	Prof. Martin Fassnacht
2019	English-language edition of Price Management published	Prof. Martin Fassnacht
2020	The Philosophy of Price, an expanded view of price	Classic philosophers

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References:

1. “Hier ist meine Seele vergraben,” interview with Hermann Simon Welt am Sonntag, November 9, 2008, p. 37 ↑
2. “Brauereien beklagen Rabattschlachten im Handel,” Frankfurter Allgemeine Zeitung, April 20, 2013, p. 12. ↑
3. Hermann Simon, Preisstrategien für neue Produkte, Opladen: Westdeutscher Verlag 1976. ↑
4. Gerald Smith, “Remembering Dan Nimer – A Tribute to a Pricing Pioneer,” The Pricing Advisor, January 2015, p. 9. ↑
5. Gerald E. Smith (editor), Visionary Pricing: Reflections and Advances in Honor of Dan Nimer, London: Emerald Publishing 2012; my own article in this reader has the title “How Price Consulting is Coming of Age,” pp. 61-79. ↑
6. Personal letter from Peter Drucker from June 7, 2003. ↑
7. Personal e-mail from Peter Drucker’s wife Doris Drucker from November 2, 2005. She writes: “I am sorry to tell you that Peter is very ill. Before his collapse he dictated a letter to you. The secretary just brought it here for his signature,” followed by the quoted text. I received the letter only after Peter Drucker’s death on November 11. We had planned to meet at his house in Claremont, CA, near Los Angeles, on November 12, 2005. ↑
8. Hermann Simon, Preismanagement, Wiesbaden: Gabler 1982. ↑
9. See Robert J. Dolan and Hermann Simon, Power Pricing – How Managing Price Transforms the Bottom Line, New York: Free Press 1996. ↑
10. Hermann Simon and Martin Fassnacht, Price Management – Strategy, Analysis, Decision, Implementation, New York: Springer Nature 2019. ↑
11. The term “lemon” for a bad product was first used in a widely-read article of the American economist George A. Akerlof in which he examines the signals of prices in the used-car market. George A. Akerlof, The Market for “Lemons”: Quality Uncertainty and the Market Mechanism, The Quarterly Journal of Economics, August 1970, pp. 488-500. Akerlof received the Nobel Prize in 2001. ↑
12. Baltasar Gracian, Handorakel und Kunst der Weltklugheit, Berlin: Insel Verlag 2009. ↑
13. www.iposs.de/1/gesetz-der-wirtschaft; accessed on Juni 6, 2017. ↑
14. Neal Thompson, Light This Candle: The Life And Times of Alan Shepard, New York: Three Rivers Press (paperback reprinted edition) 2005: p. 388 ↑
15. Michael J. Sandel, What Money Can’t Buy: The Moral Limits of Markets, New York: Farrar, Straus and Giroux 2012 ↑
16. See Peter Cramton, R. Richard Geddes, and Axel Ockenfels, “Markets for Road Use – Eliminating Congestion through Scheduling, Routing, and Real-Time Road Pricing,” Working Paper, Cologne University 2018. ↑
17. T. Christian Miller, “Contractors Outnumber Troops in Iraq,” Los Angeles Times, July 4, 2007 and James Glanz, “Contractors Outnumber U.S. Troops in Afghanistan,” New York Times, September 1, 2009. ↑
18. Michael J. Sandel, What Money Can’t Buy: The Moral Limits of Markets, New York: Farrar, Straus and Giroux 2012; see also John Kay, “Low-Cost Flights and the Limits of what Money Can Buy,” Financial Times, January 23, 2013, p. 9 ↑
19. Socrates, Euthydemos. ↑
20. Lucas Pfisterer and Stefan Roth, “Value Creation in Usage Processes – Investigating the Micro-foundations of Value-in-Use, Marketing” Journal of Research and Management, 3/2018. ↑
21. Aristotle (384-322 BC) is often cited as the father of the sharing economy. But actually the pioneer was Socrates. The lives of these two philosophers did not overlap. Plato, the mentor of Aristotle, who lived from 427 to 348 BC, overlapped with both Socrates and Aristotle. ↑
22. Aristotle, Politics, Book I; see also Edward W. Younkins, Aristotle and Economics, www. quebecoislibre.org/050/050915-11.htm, accessed on September 27, 2018. ↑
23. Gossen, H. H. (1854). Entwicklung der Gesetze des menschlichen Verkehrs und der daraus fließenden Regeln für menschliches Handeln. Braunschweig: F. Vieweg. ↑
24. Georg Tacke, Nichtlineare Preisbildung: Höhere Gewinne durch Differenzierung, Wiesbaden: Gabler 1989. ↑
25. RH Tawney, Religion and the Rise of Capitalism – On Aquinas and just price, New York: Penguin 1948, p. 40. ↑
26. “Post-Sandy Price Gouging: Economically Sound, Ethically Dubious,” Time November 2, 2012 ↑
27. “Uber’s Prices Surged in Sydney During the Hostage Crisis, and Everyone Is Furious,” New Republic, December 14, 2014 ↑
28. “London terror attack: Uber slammed for being slow to turn off ‘surge pricing’ after rampage,” Independent, June 4, 2017 ↑
29. “Uber is refunding passengers who used the service after the Londoin terror attack,” Mashable, June 5, 2017. ↑
30. Karl Marx, Wages, Prices, and Profits, Moscow: Foreign Languages Publishing House 1951, p. 28. ↑
31. Mariana Mazzucato, The Value of Everything, London: Penguin Books 2018, p. 57. ↑
32. Madhavan Ramanujam and Georg Tacke, Monetizing Innovation: How Smart Companies Design the Product Around the Price. Hoboken: Wiley 2016. ↑
33. For an in-depth treatment of price differentiation and quantification of subjective value, see Hermann Simon and Martin Fassnacht, Price Management – Strategy, Analysis, Decision, Implementation, New York: Springer Nature 2019. ↑
34. Mariana Mazzucato, The Value of Everything, London: Penguin Books 2018, p. 57. ↑
35. Roy Mottahedeh, The Mantle of the Prophet, London: OneWorldPublications 2000, p. 34. ↑