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