Many businesses can uncover huge profits hidden behind improper pricing. A proper pricing strategy should not be based only on general criteria like costs, competitors and business objectives, but on different perceptions of customers about the value of the product or service. The book lays emphasis on value-based pricing and adds that it is superior to any other pricing strategy.
Rafi Mohammed, the renowned expert at pricing strategy, aims at shaking up the common perspective one has on pricing. In fact, the book shows that there are no limitations to creative approaches one can think of while designing a pricing strategy for any business. Using interesting tales and examples, the author first describes the most common dilemma of a business decision: how to fix prices—the only source of revenue and, therefore, is of paramount importance. Though, the book claims that it suggests ways to make more money from the pricing strategies of products or services, the biggest plus point in this book is that it does not contain any prescriptive to-do list; instead it tries to explain in detail the in-and-out of pricing strategies with numerous real life examples, showing how pricing works.
The author believes that the general considerations of even the most sophisticated businessman while taking pricing decisions are based on formulas and instincts, which depend on what the competition is charging, mark-up costs and doing things as they have always been done. But, taking the cue from the fact that even a marginal change in price can result in huge changes in revenues, the author shows that right pricing strategy can boost business profits and can grow customer base to many folds. As the name of the book suggests, pricing is an art; and this art involves understanding the fact that different customer segments are willing to pay different prices for the same product. Therefore, the basics of segmentation in general can be used as a platform to create pricing strategies. That's why wisdom says—prices should not be based on costs but on values in the minds of customers. The book explains how people coming for an auction start bidding for a price say $100 and one person ends up paying $1000 for the same product. Auctions demonstrate different values or importance different customers give to the same product. |
