Pricing on Purpose

Pricing on Purpose explores the importance of pricing, one of the four Ps (product, promotion, place, and price) of marketing, that is largely ignored in business literature. Pricing is the opportunity for a business to capture the value of what it provides to the customer, and deserves as much attention as promotion, product and place in the marketing strategy of any business. This book calls attention to the market share fallacy, explains the difference between cost-plus pricing and value pricing, and provides best-practice pricing examples. It presents the theory of value long established in the economics profession and how any business can use various pricing strategies to communicate and capture the value of their products and services.

Pricing on Purpose explores the importance of pricing, oneof the four Ps (product, promotion, place, and price) of marketingthat is largely ignored in business literature. Pricing is theopportunity for a business to capture the value of what it providesto the customer, and deserves as much attention as promotionproduct and place in the marketing strategy of any business. Thisbook calls attention to the market share fallacy, explains thedifference between cost-plus pricing and value pricing, andprovides best-practice pricing examples. It presents the theory ofvalue--long established in the economics profession--andhow any business can use various pricing strategies to communicateand capture the value of their products and services.

Foreword xiPreface xvAcknowledgments xixAbout the Author xxv1 Why Is Movie Theater Popcorn So Expensive? 12 Why Are We in Business? 73 Mind Over Matter 154 The Old Business Equation 255 The New Business Equation 316 Ninety-Nine-Cent Pricing, Engagement Rings, and the Assumption of Rationality 417 The Invisible Hand: No One Person Knows How to Make a Pencil 498 ATale of Two Theories 639 Cost-Plus Pricing's Epitaph 8710 The Wrong Mistakes 10311 Price-Led Costing Replaces Cost Accounting 12112 What and How People Buy 12913 The Value Proposition 14314 The Consumer Surplus and Price Discrimination 17515 Customer Segmentation Strategies 19716 Price Discrimination in Practice 21317 There Is No Such Thing as a Commodity 23518 Baker's Law: Bad Customers Drive Out Good Customers 24919 Ethics, Fairness, and Pricing 26920 Antitrust Law 28321 Who Is in Charge of Value? 30722 Pricing on Purpose: Getting Paid for the Value Your Company Creates 333Bibliography 343Suggested Reading 355Index 367