I just read an article titled, “How Amazon and McDonald’s Use Bundling to Sell More of Everything.” Since I spend a lot of time thinking about how packaging impacts pricing, I was curious. It was a well-written article with an insightful concept of superfans and casual fans. It’s worth a read. BUT, what I wanted … Read more
Humans are interesting creatures. We can understand and implement concepts of such complexity – and yet, we are allured by simple things. When it comes to economic decisions (like what we buy), the easier the decision is, the more likely we are to make a commitment. Just as behavioral economist Richard Thaler said: “If you … Read more
To maximize the profit increase you can achieve through pricing, you must use some form of price segmentation. After all, not all customers have the same willingness to pay. Setting different prices for the same product/service means more people can buy from you, and you earn more revenue. But is price segmentation fair? Is it … Read more
I remember hearing about a company who changed their customer’s behavior simply by altering the default setting for their subscription check-box. Their original version offered both annual and monthly subscriptions, with the monthly version selected as the default. With this version, they had about 11% of their subscribers sign up with annual subscriptions. Utilize Your … Read more
Often people ask if I offer consulting services. I hate that question because I have to honestly answer no, but then explain I offer advisory services. Here is what you might want to know about being or hiring a pricing advisor. What is the difference? In my career, I’ve hired and worked beside pricing consultants. … Read more
What is the difference between a 75% gross margin, and 50% gross margin? That’s easy, 25%. So, you might be tempted to jump to the (incorrect) conclusion that if you currently have 50% gross margin, and want to grow that number to 75%, you simply raise your price by 25%. However, to go from 50% … Read more
I came across a great pricing insight a while back on a day when my car battery died. After unsuccessfully attempting to replace it myself (why are cars so hard to work on these days?), I called around to find a shop to do it. One shop quoted a flat rate for the job, which … Read more
Customer lifetime value refers to how much value (or revenue) we could earn from a customer over the duration of their time with us as a customer. So long as it’s profitable to do so, a business should prioritize deepening and lengthening this metric. So, how do you price to maximize the lifetime value of … Read more
What exactly is the role of variable costs when it comes to pricing? This might already be obvious from the post “Fixed Costs Matter to Your Business – NOT Your Pricing“, but I felt the need to spell it out in more detail. The answer? It depends. It depends on if you are able to … Read more
The first time I heard the concept – Price for Market Capitalization – was from a close friend of mine, Brent Bilger. Brent has been involved with start-up companies for over 3 decades, and has had a hand in many successes. Like most great ideas, once you hear this concept, it seems obvious – but … Read more
