ew business practices are as essential as pricing. Pricing just may be the most important piece of the pie of business. Although, all pieces are intertwined and correlated with each other. Pricing is an essential part of the business. The ironic point is that the higher your prices the higher profits. How do we maximize our profits through pricing so that those same profits may be reinvested in the business? Or, how can pricing impact customer loyalty? These questions and so many more will be examined in this list of the best books on pricing strategy. In which, the pricing strategy becomes a key ingredient in your business.
Best Books on Pricing Strategy: THE LIST
1. The Strategy and Tactics of Pricing | By Thomas Nagle and George Muller
The Strategy and Tactics of Pricing explain how to manage markets strategically and how to grow more profitably. Rather than calculating prices to cover costs or achieve sales goals, students will learn to make strategic pricing decisions that proactively manage customer perceptions of value, motivate purchasing decisions, and shift demand curves.
This edition features a new discussion on harnessing concepts from behavioral economics as well as a more streamlined “value cascade” structure to the topics. Readers will also benefit from
- Major revisions to almost half of the chapters, including an expanded discussion of big data analytics and a revised chapter on “Specialized Strategies,” which addresses timely technical issues like foreign exchange risks, reactions to market slumps, and managing transfer prices between independent profit centers.
- A completely rewritten chapter on “Creating a Strategic Pricing Capability,” which shows readers how to implement the principles of value-based, strategic pricing successfully in their organizations.
- In-chapter textboxes, updated to provide walk-through examples of current pricing challenges, revenue models enabled by an increasingly digital economy, and advances in buyer decision-making, explained through classic principles that still apply today.
- Chapter summaries and visual aids, which help readers grasp the theoretical frameworks and actionable principles of pricing analysis.
This comprehensive, managerially-focused text is a must-read for students and professionals with an interest in strategic marketing and pricing. A companion website features PowerPoint slides and an instructor’s manual, including exercises, mini-cases, and examination questions. The authors also provide a link to Deloitte’s Polaris analytical pricing software, helping students put theory into practice by exploring real-world scenarios.
2. Pricing Strategy | By Tim J. Smith
Learn how to make pricing decisions that will maximize a firm’s profits by creating and capturing customers with PRICING STRATEGY: SETTING PRICE LEVELS, MANAGING PRICE DISCOUNTS, AND ESTABLISHING PRICE STRUCTURES. Written by a recognized pricing thought leader and principal of a successful pricing firm, Tim J. Smith, this comprehensive book emphasizes the stakeholder’s importance in making decisions, while highlighting key trade-offs to consider when choosing between opposing outcomes. In this book’s balanced presentation of quantitative instruction and qualitative concepts, learn more about the influences that should guide your decision making.
3. Power Pricing | By Robert J. Dolan
In this long-awaited book, the world’s two leading price experts Robert J. Dolan and Hermann Simon take managers beyond conventional thinking to show how their breakthrough system of “power pricing” will improve the bottom line by an order of magnitude.
In today’s hypercompetitive global marketplace, a company’s pricing policy can make or break the bottom line. Yet a surprising number of firms attempt to increase profits without the aid of a carefully and creatively designed pricing strategy. They destroy popular but not necessarily financially savvy ideas on pricing, such as relying on a standard markup on cost rule. They expose as passive the “strategy” of letting the market or a competitor “set the price.” But the key is in what they provide: the tools by which the pedestrian pricer can become a “power pricer” who achieves quantum leaps in financial performance by aggressively implementing sophisticated pricing strategies.
Dolan and Simon combine their international expertise and know-how to reveal the latest breakthroughs in pricing tactics. Drawing on their firsthand experience with firms throughout the world, they make available for the first time the logic behind the actual practices of “power pricers” engaged in fierce global competition. Market segmentation, promotional pricing, competitive strategic pricing, international pricing, nonlinear pricing, interrelated product line pricing, and time-customized pricing are just a few of the crucial concepts which the authors explore and explain when and how to implement. The authors’ approach to creating “power pricers” is twofold. They specify the practices of the strategic pricers among the world’s most successful firms and then lay out a four-dimensional system to attain this level of pricing sophistication and resulting profit improvement. Dolan and Simon draw their portrait of the power pricer in four critical dimensions: viewpoint on pricing, fact file support pricing, tools and scope of analysis, and determination and implementation.
The authors argue that firms must view pricing as a key and highly manageable element in the profit equation, worthy of attention equal to that accorded to sales volume and costs. Companies must have data at their fingertips that are more accurate, timely, relevant, and disaggregated than their competitors’. Using these data to create a systematic analysis of customers and competitors, companies will be able to create and assess pricing scenarios to achieve long-term profitability.
This targeted, quadrupled approach to transforming the bottom line by managing price leaves no strategy or option unturned. Power Pricing is a highly detailed yet practically focused book that will become required reading for business leaders; general managers; marketing, product, and brand managers; accountants, financial managers, and marketing students, world-wide.
4. Value-Based Pricing | By Harry Macdivitt
A Groundbreaking Pricing Model for the New Business Landscape.
Why would any customer choose Brand X over Brand Y, regardless of price? In a word: Value.
When customers feel they are getting good value from your product or service, they are more than happy to pay more―which is good news for you and your business. Even in today’s global market―with its aggressive competitors, low-cost commodities, savvy consumers, and intangible digital offerings―you can outsell and outperform the rest using Value-Based Pricing. Done correctly, this method of pricing and selling helps you:
- Understand your customers’ wants and needs
- Focus on what makes your company different
- Quantify your differences and build a value-based strategy
- Communicate your value directly to your customers
Now more than ever, it is essential for you to reexamine the reality of the value you offer customers―and this step-by-step program shows you how.
Developed by global consultants Harry Macdivitt and Mike Wilkinson, Value-Based Pricing identifies three basic elements of the Value Triad: revenue gain, cost reduction, and emotional contribution. By delivering these core values to your customers―through marketing, selling, negotiation, and pricing―you can expect an increase in profits, productivity, and consumer goodwill. These are the same value-based strategies used by major companies such as Philips, Alstom, Siemens, and Virgin Mobile. And when it comes to today’s more intangible markets―such as consulting services or digital properties like e-books and music files―these value-based strategies are more important than ever.
So forget about your old pricing methods based on costs and competition. Once you know your own value―and how to communicate it to others―everybody profits.
5. Pricing with Confidence | By Reed Holden
Bad pricing is a great way to destroy your company’s value, revenue, and profits. With ten simple rules, this book shows you how to deliver both healthy profit margins and robust revenue growth while kicking the dreaded discounting habit. The authors destroy the conventional wisdom that you have to trade margins for revenues and show you how to fully exploit the value your company offers customers. This is a proven plan for increasing sales without sacrificing profits.
6. Handbook on the Psychology of Pricing | By Dr. Markus Husemann-Kopetzky
Prices are paid by customers. But many companies solely focus on their internal costs (mark-up pricing), their external competitors (competition-based pricing), or assume that people behave rationally (value-based pricing).
The Handbook on the Psychology of Pricing dives deep into a customer-centric approach. This book presents the most comprehensive collection of psychological pricing strategies and tactics currently available in the market and introduces you to intriguing, hard-to-believe insights into consumer psychology, subconscious persuasion, and people’s perception of prices.
Readers will discover the profound art of psychological pricing and influencing customers’ buying behavior. More specifically, you will
- Understand how to raise the attractiveness of your prices and offerings for your customers and lift sales and margins for your business.
- Learn how to increase customers’ willingness to pay for your products and services.
- Expand your pricing skill set and learn about more than 100 effects unearthed and backed by solid academic research.
- Boost your professional value by emerging yourself into a new and growing field of research: behavioral pricing.
- Stay ahead of the curve and receive free updates exclusive for readers.
Dr. Husemann-Kopetzky translates hundreds of academic papers into a handy manual for business owners and managers to optimize prices from a customers’ perceptive.
This book is required reading for entrepreneurs, general and category managers, marketers, product and brand managers, pricing strategists, management consultants, and business students who are interested in adding an invaluable pricing edge to their business practice and personal pricing quiver.
7. Priceless: The Myth of Fair Value | By William Poundstone
Prada stores carry a few obscenely expensive items in order to boost sales for everything else (which look like bargains in comparison). People used to download music for free, then Steve Jobs convinced them to pay. How? By charging 99 cents. That price has a hypnotic effect: the profit margin of the 99 Cents Only store is twice that of Wal-Mart. Why do text messages cost money, while e-mails are free? Why do jars of peanut butter keep getting smaller in order to keep the price the “same”? The answer is simple: prices are a collective hallucination.
In Priceless, the bestselling author William Poundstone reveals the hidden psychology of value. In psychological experiments, people are unable to estimate “fair” prices accurately and are strongly influenced by the unconscious, irrational, and politically incorrect. It hasn’t taken long for marketers to apply these findings. “Price consultants” advise retailers on how to convince consumers to pay more for less, and negotiation coaches offer similar advice for businesspeople cutting deals. The new psychology of price dictates the design of price tags, menus, rebates, “sale” ads, cell phone plans, supermarket aisles, real estate offers, wage packages, tort demands, and corporate buyouts. Prices are the most pervasive hidden persuaders of all. Rooted in the emerging field of behavioral decision theory, Priceless should prove indispensable to anyone who negotiates.
Quotes from Priceless: The Myth of Fair Value;
“One of the things that price consultants have learned is that what consumers say and what they do are not the same thing.”
“Many people like myself who teach marketing start the course by saying, ‘We’re not about manipulating consumers, we’re about discovering needs and meeting them,’ ” said Eric Johnson of Columbia University. “And then, if you’re in the field awhile, you realize, yes, we can manipulate consumers.”
“The stumbling block isn’t the certainty effect per se. It’s the way that smart people are influenced by mere words, by the way, the choices are framed.”
“Isn’t the human mind a funny thing? A bullet is a bullet, dead is dead. The reduction in the probability of your demise is precisely the same in both cases. Why isn’t your price the same?”
“They note that the coherent arbitrariness of salaries is tacitly recognized in an old one-liner: A wealthy man is one who earns $100 more than his wife’s sister’s husband.”
“Authentic humans don’t show the perfect, Chessmaster appreciation of consequences that von Neumann’s theory demands. Instead, decision-makers resort to heuristics, or mental shortcuts, to arrive at quick, intuitive choices.”
8. The Psychology of Price | By Leigh Caldwell
One of the most important questions for any business is: how much should I charge?
Economics has an easy answer – just look at where demand and supply meet.
Unfortunately, this easy answer is wrong. What about the effect of changing the timing of payment? How do a customer’s personal and financial circumstances affect their willingness to pay?
Using The Psychology of Price, you can discover why the price is a psychological issue – and how to make the most of that knowledge. Written by the founder of the UK’s leading pricing consultancy Inon – whose clients range from the BBC and confused.com to Grants Whisky and HM Treasury – The Psychology of Price offers a unique opportunity for business owners and finance and marketing professionals to gain an insight into the way consumers think and purchase – and to learn the actual research methods and pricing techniques used by multinational companies.
A practical, jargon-free workbook, The Psychology of Price demystifies a critical aspect of running a business, lucidly and logically explaining the science behind pricing so that you can generate more demand, more profit, and more customer value today.
Inside The Psychology of Price, you can learn:
-How to get people to expect to pay more
-How presenting products that nobody wants can influence what customers are willing to pay
-How upselling by low-cost add-ons can increase sales and perceived value
Crucially, The Psychology of Price will help you find out how good your pricing really is and give you the toolkit to ensure you charge the right price point for your product or service.
What have you got to lose?
9. Confessions of the Pricing Man | By Hermann Simon
The world’s foremost expert on pricing strategy shows how this mysterious process works and how to maximize value through pricing to the company and customer.
In all walks of life, we constantly make decisions about whether something is worth our money or our time or try to convince others to part with their money or their time. Price is the place where value and money meet. From the global release of the latest electronic gadget to the bewildering gyrations of oil futures to markdowns at the bargain store, price is the most powerful and pervasive economic force in our day-to-day lives and one of the least understood.
The recipe for successful pricing often sounds like an exotic cocktail, with equal parts psychology, economics, strategy, tools, and incentives stirred up together, usually with just enough math to sour the taste. That leads managers to water down the drink with hunches and rules of thumb, or leave out the parts with which they don’t feel comfortable. While this makes for a sweeter drink, it often lacks the punch to have an impact on the customer or on the business.
It doesn’t have to be that way, though, as Hermann Simon illustrates through dozens of stories collected over four decades in the trenches and behind the scenes. A world-renowned speaker on pricing and a trusted advisor to Fortune 500 executives, Simon’s lifelong journey has taken him from rural farmers’ markets to a distinguished academic career, to a long second career as an entrepreneur and management consultant to companies large and small throughout the world. Along the way, he has learned from Nobel Prize winners and leading management gurus and helped countless managers and executives use pricing as a way to create new markets, grow their businesses, and gain a sustained competitive advantage. He also learned some tough personal lessons about value, how people perceive it, and how people profit from it.
In this engaging and practical narrative, Simon leaves nothing out of the pricing cocktail but still makes it go down smoothly and leaves you wanting to learn more and do more—as a consumer or as a business person. You will never look at pricing the same way again.
Quotes from Confessions of the Pricing Man;
“What has changed in the meantime? Managers have become keenly aware that value alone does you little good unless you can communicate it successfully. That means that customers understand and appreciate what they are buying. Remember, the only fundamental driver of willingness to pay is the perceived value in the eyes of the customer.”
“Pricing policy today is basically guess work,” he told me in the early 2000s. “What you are doing is pioneering work. And I think that it will be quite some time before any of the competitors catch on.”6 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 two colleagues: “Market share and profitability have to be balanced and profitability has often been neglected. This book is therefore a greatly needed correction.”
10. Contextual Pricing | By Robert G. Docters
A few leading companies have jettisoned ideas about pricing that other companies believe are indispensable. The result has been superior performance against competitors who persist in a simplistic 1990s belief in “value.”
Contextual Pricing describes how buyers are influenced by comparison points and contextual messages more than by actual price levels. Identical products can sell at radically different prices to the same target customer—if the context is strategically managed. This fact is how Procter & Gamble, GE, Coca-Cola Company, Amazon, Google, Microsoft, and others make sure they get the best possible price. The use of context is changing the way companies price and sell in the new global economy.
This readable and market-tested book describes the contextual pricing perspective, how it is being used in B2B and B2C markets, and how you can make the shift to contextual pricing in your own business. Whether you’re a CEO, P&L manager marketing director, sales manager, or entrepreneur, Contextual Pricing shows you how to:
- Understand how your customer will make buying decisions and the role of pricing in those decisions
- Establish better, more intuitive prices using context
- Develop contextual pricing strategies that defeat competitor pricing—how contextual pricing can be the antidote to destructive price wars
- Harmonize your pricing with branding, product development, and channel strategies
- Increase your profits with proven pricing tools, such as scientific bundling, tiering, branding, upsell “hooks” and more
Through its illuminating case-by-case studies, Contextual Pricing delivers a wide range of pricing techniques and customer insights that you won’t find anywhere else. You’ll learn how to avoid common pitfalls when raising or lowering prices and discover how you can compete in traditional or emerging digital marketplaces—and beat the competition through superior tactics, not through lower margins.
When you know the secrets of Contextual Pricing, you can name your price, drive your sales, increase your profits, and own your success.
Quotes from Contextual Pricing;
“The focus on context is growing. Leading firms such as Coca-Cola, Amazon, GE, IBM, Google, Hertz, Proctor & Gamble, Standard & Poor’s, and AT&T have begun to use context to shape their offers.”
11. Pricing: The Third Business Skill | By Ernst-Jan Bouter
Pricing: The Third Business Skill shows you in a clear and concise manner how to set optimum selling prices for your company and set up a high-quality pricing function, using accessible models and examples. Discover how Google, LinkedIn, Apple, BMW, Gillette, and other successful companies achieve high profits by deploying optimized pricing strategies. Read about General Electric’s CEO when he considers GE’s shortcomings in pricing.
After reading this book, the pricing function will no longer hold any secrets for you, empowering you to get started on structurally improving your margins right away!
12. The 1% Windfall | By Rafi Mohammed
Leading pricing expert Rafi Mohammed shows businesses how to reap a financial windfall and foster growth using the underutilized and often overlooked strategy of setting prices.
The 1% Windfall reveals how modest incremental changes to everyday business practice—pricing—can yield significant rewards. Illustrating the power of pricing, a study of the Global 1200 found that if companies raised prices by just 1%, their average operating profits would increase by 11%. Using a 1% increase in price, some companies would see even more growth in the percentage of profit: Sears, 155%; McKesson, 100%; Tyson, 81%; Land O’Lakes, 58%; and Whirlpool, 35%.
The good news is that better pricing is more than simply raising prices. Instead, the key is to offer customers a variety of pricing options. This strategy is win-win: profits to companies and choices for consumers.
But how do executives and managers set the right price? Underpinned by sound empirical research and real-life anecdotes, The 1% Windfall addresses this fundamental question. This book offers guidelines that any company—whether a multinational conglomerate, a small business, or even a nonprofit—can follow to create a comprehensive pricing strategy for any product or service. In addition, these versatile techniques and tools provide solutions to avert a slump in a recession, offset the impact of inflation, or battle a new competitor.
The result is a mind-opening, clear blueprint for companies to price for profit and growth.
13. No B.S. Price Strategy | By Dan S. Kennedy and Jason Marrs
Millionaire maker Dan S. Kennedy and pricing/marketing strategist Jason Marrs empower small business owners to take control of their profits by taking charge of the source: their price. Entrepreneurs are dared to re-examine their every belief about pricing and take a more creative, bold approach, using the price to their extreme advantage and allowing them to be as profitable as possible. Liberating small business owners from all fear and timidity toward pricing, Kennedy and Marrs teach small business owners to uncover how to avoid the 9 ultimate price and fee failures including excess concern about competitors’ lower prices, attracting customers who buy by price, and not offering premium pricing options. They also reveal how to discount without damage, the secret to price elasticity, how to break free from the price-product link, and, most importantly, how to set prices for the greatest profits.
• Kennedy and Marrs disclose little-known revelations about the power of pricing including:
• the 9 ultimate price and fee failures
• the trick behind discounting without devaluing
• the 5 price-related propositions to be concerned with
• the million-dollar secret behind “FREE”
• how to win price wars with competitors
• Covers pricing strategies specific to recessions
Quotes from No B.S. Price Strategy;
“One year, on vacation in Hawaii, I was relaxing at a beach, watching whales in the distance, when a fisherman, obviously a local, drove up in his pick-up truck. He got out with a dozen fishing rods. Not one. A dozen. He baited each hook, cast all the lines into the ocean, and set the rods in the sand. Intrigued, I wandered over and asked him for an explanation. “It’s simple,” he said. “I love fish but I hate fishin’. I like eatin’, not catchn’. So I cast out 12 lines. By sunset, some of them will have caught a fish. Never all of ’em. So if I only cast one or two I might go hungry. But 12 is enough so some always catch. Usually there’s enough for me and extras to sell to local restaurants. This way, I live the life I want.” The simple fellow had unwittingly put his finger on a powerful secret. The flaw in most businesses, that keeps them always in desperate need—which suppresses prices—is: too few lines cast in the ocean.”
14. How to Price Effectively | By Utpal Dholakia
Pricing decisions are among the most important and impactful business decisions that a manager can make. How to Price Effectively: A Guide for Managers and Entrepreneurs introduces the value pricing framework, a structured, versatile, and comprehensive method for making good pricing decisions and executing them. The framework weaves together the latest thinking from academic research journals, proven best practices from the leading pricing experts, and ideas from other fields such as medical decision making, consumer behavior, and organizational psychology. The book discusses what a good pricing decision is, which factors you should consider when making one, the role played by each factor―costs, customer value, reference prices, and the value proposition― and how they work together, the importance of price execution, and how to evaluate the success of pricing decisions. You will also be introduced to a set of useful and straightforward tools to implement the value pricing framework and study many examples and company case studies that illustrate its nuances. The purpose of How to Price Effectively: A Guide for Managers and Entrepreneurs is to provide you with a comprehensive, practical guide to making, executing, and evaluating pricing decisions.
Quotes from How to Price Effectively;
“A small increase in prices while maintaining the firm’s sales and cost levels generates a significant boost to its profit.”
15. Negotiation with Backbone | By Reed K. Holden
B2B sales professionals: resist mindless discounting, level the playing field against tough procurement organizations, and close the deal on your terms! Negotiating with Backbone, Second Edition definitive guide for every sales pro facing the “procurement buzzsaw” – and it’s just been updated with even more powerful strategies and techniques! Where traditional purchasing managers negotiated, procurement officials seek to dictate, through multiple tactics with a single intent: to gain unprecedented discounts and concessions. Premier pricing strategist and sales consultant Reed K. Holden gives you the powerful new strategies and tactics you need to protect your margins and get the right deal. Holden guides you through recognizing what purchasing negotiators are really up to, keep value at the forefront of negotiations, and avoiding the mindless discounting that wrecks profitability. Holden details eight strategies for all types of pricing negotiations, including approaches for negotiating with price buyers, relationship buyers, value buyers, and poker players, reverse auctions, and much more. In this Second Edition, he offers extensive new coverage of establishing your foundation of value and developing crucial give-get options, including value-added services. This book will be an invaluable resource for every B2B sales professional, customer-facing professional, and the executive responsible for leading successful sales organizations.
16. Pricing for Profit | By Peter Hill
Price is the most significant factor affecting the profitability of every business, profit center, or department. When the pressure is on to perform or grow, your instinct may be to discount, undercut your competitors, cut costs and promote through price. Yet these are often the last things you should do. Pricing for Profit is the most practical guide on pricing available. Using a firm, a profit-focused framework developed running real projects for real businesses, this book shows you how by getting your pricing structures right you can make a huge difference to your bottom line. It gives business owners, managers, and leaders simple, achievable pricing strategies that will deliver sustainable business growth. Can you afford to leave money on the table? If not, Pricing for Profit is the guide for you.
Quotes from Pricing for Profit;
“Price is the most significant factor affecting the profitability of a business, profit center or department.”
“Whatever your business, selling some products at very low prices in the hope that it is generating profits elsewhere is very unlikely to succeed.”
“Many business owners and managers feel that they are under constant pressure from customers to reduce their prices.”
“You will lose around seven times as many customers through perceived indifference than you will through price issues.”
“One of the key factors in setting the price is to use a number that demonstrates a degree of accuracy or certainty over the price itself.”
“Don’t be afraid to state the value you are giving and always offer a higher value option at an increased pricing level.”
“Pricing is an emotive issue and you will almost certainly encounter some resistance to any changes you make.”
17. Brilliant Selling | By Tom Bird and Jeremy Cassell
You can sell anything you want and targets are always achievable – Brilliant Selling will show you how. Whether you’re new to selling or want to take yourself to the next level, this bestselling, and definitive guide will show you how to instantly improve your sales performance.
Quotes from Brilliant Selling;
““Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the gray twilight that knows neither victory or defeat.” THEODORE ROOSEVELT”
“Make a commitment to succeed.”
“Christ, the Buddha, and Muhammed experienced having the cords fall out of their outlets every once in awhile. They became real humans. The biggest difference between them and those around them was that they knew when the cord fell out or partially wiggled free from the outlet. And they were smart enough to take the time to disappear into the wilderness, just as Christ did, to push that cord back in.”
18. Pricing Strategy: How to Price a Product | By Bill McFarlance
Many businesses have no pricing strategy, they simply make something up, big mistake! With the 9 rules and other information on how to price a product in this book, you should have a strategy that will help increase sales and profits. Also explained is how actually increasing your prices may be the smartest move you’ve ever made.
19. The Art of Pricing | By Rafi Mohammed
Want to make a bad year better or turn a good year into a blockbuster? Improve your pricing strategy and discover the untapped gold mine that exists in your products and services.
Whether you are in marketing, a manager, on the salesforce, in finance, or the CEO/CFO, pricing your products matters to you. The Art of Pricing is a practical guide for solving one of the most important dilemmas in business: how to use price to uncover hidden profits and find new opportunities for growth.
This roadmap to pricing illustrates and explains:
- The financial windfall that can be reaped from small changes in the price
- Methods to derive the “right price” for your product or service
- How a series of easy-to-implement strategies enable companies to serve and profit from the largest possible customer base
- How new pricing strategies can activate dormant customers
- Why the key to better pricing is to provide customers with options – different prices, versions, and opportunities to purchase – to best meet their needs.
Using a range of examples, from small businesses to big companies like Ford, Rafi shows how expanding your vision of pricing can accelerate profits and growth at your company.
20. The Price Advantage | By Walter L. Baker, Michael V. Marn, and Craig C. Zawada
A comprehensive look at creating pricing strategies that work in both good economic times and bad
Written by three preeminent pricing experts at McKinsey & Company, the Second Edition of The Price Advantage is a practical pricing guide for the executive or pricing practitioner who wants to identify, capture, and sustain substantial pricing gains in their business.
Pricing is by far the most powerful profit lever that managers can influence. Yet few companies approach pricing in a way that fully capitalizes on its value. This Second Edition, a major revision, and extension of the first book shows you what it takes to achieve the price advantage in today’s competitive and complex business environments. Based on in-depth, first-hand experience with thousands of companies, this book provides managers with a pragmatic guide through the maze of pricing issues. It reinforces why pricing excellence is more critical than ever today and then explains state-of-the-art approaches to analyzing and improving your own pricing strategy and execution.
- Explores the fundamental role of pricing infrastructure in achieving the price advantage
- Includes new topics such as software and information products pricing, lifecycle pricing, custom-configured products pricing, pricing of high-count product lines, pricing in distributed sales environments, “razor/razor blades” pricing, and tiered products and services pricing
- Revisits the full range of classic McKinsey pricing tools, including the pocket price waterfall and value maps
Engaging and informative, the Second Edition of The Price Advantage will put this essential discipline in perspective.
21. Pricing Done Right | By Tim J. Smith
Pricing Done Right provides a cutting-edge framework for value-based pricing and clear guidance on ideation, implementation, and execution. More action plan than a primer, this book introduces a holistic strategy for ensuring on-target pricing by shifting the conversation from ‘What is value-based pricing?’ to ‘How can we ensure that our pricing reflects our goals?’ You’ll learn to identify the decisions that must be managed, how to manage them, and who should make them, as illustrated by real-world case studies. The key success factor is to build a pricing organization within your organization; this reveals the relationships between pricing decisions, how they affect each other, and what the ultimate effects might be. With this deep-level insight, you are better able to decide where your organization needs to go.
Pricing needs to be done right, and pricing decisions have to be made—but are you sure that you’re leaving these decisions to the right people? Few managers are confident that their prices accurately reflect the cost and value of their product, and this uncertainty leaves money on the table. This book provides a practical template for better pricing strategies, methods, roles, and decisions, with a concrete roadmap through execution.
- Identify the right questions for pricing analyses
- Improve your pricing strategy and decision-making process
- Understand roles, accountability, and value-based pricing
- Restructure perspectives to help pricing reflect your organization’s goals
The critical link between pricing and corporate strategy must be reflected in the decision making process. Pricing Done Right provides the blueprint for more accurate pricing, with expert guidance throughout the change process.
22. Pricing Handmade Soap for Profit | By Benjamin Aaron
There is no magic formula when it comes to pricing your handcrafted soap and skincare products. And if you’re using one, your approach might be too narrow. Pricing products can be overwhelming and confusing. Understanding what a profit margin really is, is the key to correctly pricing. In this book, I showcase the need to set proper goals for your company, understand what it takes to configure your product’s cost, account for all expenses as a company (both fixed and variable) and create pricing scenarios that will dictate potential profit margins. Because let’s face it, you’re in this to make money. Making soap and skincare products is the easy part. Finding your company’s true net profit margin is incredibly difficult. In 27 steps, this book shows you how to not only properly price your products but how to create a sound budget that guarantees profit!
23. Derivatives Essentials | By Aron Gottesman
Derivatives Essentials is an accessible, yet detailed guide to derivative securities. With an emphasis on mechanisms over formulas, this book promotes a greater understanding of the topic in a straightforward manner, using plain-English explanations. Mathematics is included, but the focus is on comprehension and the issues that matter most to practitioners—including the rights and obligations, terms and conventions, opportunities and exposures, trading, motivation, sensitivities, pricing, and valuation of each product. Coverage includes forwards, futures, options, swaps, and related products and trading strategies, with practical examples that demonstrate each concept in action. The companion website provides Excel files that illustrate pricing, valuation, sensitivities, and strategies discussed in the book, and practice and assessment questions for each chapter allow you to reinforce your learning and gauge the depth of your understanding.
Derivative securities are a complex topic with many “moving parts,” but practitioners must possess full working knowledge of these products to use them effectively. This book promotes a truly internalized understanding rather than rote memorization or strict quantitation, with clear explanations and true-to-life examples.
- Understand the concepts behind derivative securities
- Delve into the nature, pricing, and offset of sensitivities
- Learn how different products are priced and valued
- Examine trading strategies and practical examples for each product
Pricing and valuation are important, but understanding the fundamental nature of each product is critical—it gives you the power to wield them more effectively and exploit their natural behaviors to achieve both short- and long-term market goals. Derivatives Essentials provides the clarity and practical perspective you need to master the effective use of derivative securities products.
24. International Marketing | By Daniel W. Baack, Barbara Czarnecka, and Donald E. Baack
The authors discuss five key factors that impact any international marketing venture – culture, language, political/legal systems, economic systems, and technological differences – in relation to the core marketing concepts of markets, products, pricing, distribution (place), and promotion.
The book also covers sustainability and bottom-of-the-pyramid issues within each chapter with rich illustrations and examples from both multinational companies and smaller local concerns.
New to the second edition:
- More global focus through new examples, case studies, and the experience brought by a new co-author, Barbara Czarnecka
- A brand new chapter on Culture & Cross-Cultural Marketing, including political unrest and the recent return to nationalism (e.g. Brexit and the Trump presidency) and further coverage of developing countries
- New coverage of digital advances and social media marketing
- Updated theory and methods, including Service-Dominant Logic (S-DL), Consumer Culture Theory (CCT), and Netnography
- Additional videos supplementing the comprehensive online resource package for students and lecturers
A wealth of online resources complement this book. These include a test bank of 50-65 questions per chapter, PowerPoint slides, sample syllabi, interactive maps, country fact sheets, flashcards, SAGE journal articles, and guidelines for developing a marketing plan.
25. Pricing Strategies | By Robert M. Schindler
Written by a leading pricing researcher, Pricing Strategies makes this essential aspect of business accessible through a simple unified system for the setting and management of prices. Robert M. Schindler demystifies the math necessary for making effective pricing decisions. His intuitive approach to understanding basic pricing concepts presents mathematical techniques as simply more detailed specifications of these concepts.
26. Don't Just Roll the Dice | By Neil Davidson
How do you price your software? Is it art, science, or magic? How much attention should you pay to your competitors? This short handbook will provide you with the theory, practical advice, and case studies you need to stop yourself from reaching for the dice.
- Chapter 01: Some – but not too much – Economics
- Chapter 02: Pricing Psychology: What is your product worth?
- Chapter 03: Pricing Pitfalls
- Chapter 04: Advanced Pricing
- Chapter 05: What your price says about you (and how to change it)
Why read this book? “At Business of Software 2007, Michael Pryor held an impromptu session on how to price your software. So many people turned up, and so many people kept on arriving, that by the time they’d introduced themselves there was no time left to talk about software pricing. I’ve had similar experiences; in fact, “How do I price my software?” is probably the most common question I’m asked by software entrepreneurs and product managers.
This handbook is an attempt to answer that question.” Neil Davidson, Author.
About the Author, Neil Davidson is co-founder and joint CEO of Red Gate Software. Red Gate was founded in 1999 and now employs some 150 people. It was Cambridge News business of the year in 2006 and has been in the Sunday Times top 100 companies to work for three years running. It was founded with no VC money and little debt. Neil is also the founder of the annual Business of Software conference and runs the Business of Software social network
Quotes from Don’t Just Roll the Dice;
“Give your product a personality. 37signals may not sell the best project management software in the world, but it has personality. The 37signals team stands for something: uncompromising simplicity. Want an extra feature? Tough. If you want features, buy something else.”
27. Commodity Option Pricing | By Iain J. Clark
Commodity Option Pricing: A Practitioner’s Guide covers commodity option pricing for quantitative analysts, traders, or structures in banks, hedge funds, and commodity trading companies.
Based on the author’s industry experience with commodity derivatives, this book provides a thorough and mathematical introduction to the various market conventions and models used in commodity option pricing. It introduces the various derivative products typically traded for commodities and describes how these models can be calibrated and used for pricing and risk management. The book has been developed with input from traders and examples using real-world data, together with relevant up to date academic research.
The book includes practical descriptions of market conventions and quote codes used in commodity markets alongside typical products seen in broker quotes and used in calibration. Also discussed are commodity models and their mathematical derivation and volatility surface modeling for traded commodity derivatives. Gold, silver, and other precious metals are addressed, including gold forward and gold lease rates, as well as copper, aluminum and other base metals, crude oil and natural gas, refined energy, and electricity. There are also sections on the products encountered in commodities such as crack spread and spark spread options and alternative commodities such as carbon emissions, weather derivatives, bandwidth, and telecommunications trading, plastics, and freight.
Commodity Option Pricing is ideal for anyone working in commodities or aiming to make the transition into the area, as well as academics needing to familiarize themselves with the industry conventions of the commodity markets.
28. Monetizing Innovation | By Madhavan Ramanujam
Surprising rules for successful monetization
Innovation is the most important driver of growth. Today, more than ever, companies need to innovate to survive. But successful innovation–measured in dollars and cents–is a very hard target to hit.
Companies obsess over being creative and innovative and spend significant time and expense in designing and building products, yet struggle to monetize them: 72% of innovations fail to meet their financial targets–or fail entirely. Many companies have come to accept that a high failure rate, and the billions of dollars lost annually, is just the cost of doing business.
Monetizing Innovations argues that this is tragic, wasteful, and wrong.
Radically improving the odds that your innovation will succeed is just a matter of removing the guesswork. What happens when you put customer demand and willingness to pay in the driver seat–when you design the product around the price. It’s a new paradigm, and that opens the door to true game change: You can stop hoping to monetize, and start knowing that you will.
The authors at Simon Kucher know what they’re talking about. As the world’s premier pricing and monetization consulting services company, with 800 professionals in 30 cities around the globe, they have helped clients ranging from massive pharmaceuticals to fast-growing startups find success. In Monetizing Innovation, they distill the lessons of thirty years and over 10,000 projects into a practical, nine-step approach. Whether you are a CEO, executive leadership, or part of the team responsible for innovation and new product development, this book is for you, with special sections and checklist-driven summaries to make monetizing innovation part of your company’s DNA. Illustrative case studies show how some of the world’s best innovative companies like LinkedIn, Uber, Porsche, Optimizely, Draeger, Swarovski, and big pharmaceutical companies have used principles outlined in this book.
A direct challenge to the status quo “spray and pray” style of innovation, Monetizing Innovation presents a practical approach that can be adopted by any organization, in any industry. Most monetizing innovation failure point home. Now more than ever, companies must rethink the practices that have lost countless billions of dollars. Monetizing Innovation presents a new way forward, and a clear promise: Go from hope to certainty.
Quotes from Monetizing Innovation;
“Companies with strong product-driven or engineering cultures tend to be the ones that develop feature shocks. Firms with a culture of playing it safe and avoiding big risks typically suffer minivations. Hidden gems most often afflict companies that coddle the core business. And undead are born in firms whose top-down cultures discourage feedback and criticism from below. Let”
“Price Wars: The Only Winning Move Is Not to Play Price wars are about seeing who can lower prices the most. You don’t want to start one, and you don’t want to be the first one to move. Ultimately, a price war has only one winner: the supplier with the lowest cost. Most likely, that’s not you.”
“By the way, be prepared to learn that your price might not be high enough. The number of escalated deals is an important KPI here. Having too few escalated deals could indicate the sales team is finding it too easy to sell. You need to ask yourself whether you priced your product high enough.”
“When most people hear the word “price,” they think of a number. That’s a price point. When we use the term price, we are trying to get at something more fundamental. We want to understand the perceived value that the innovation holds for the customer.”
“If you are losing a high percentage of deals or your sales greatly and consistently deviate from your target plan, or if the sales force complains that price is the only reason they’re losing deals, you could have a sales training problem. Or you may have to revisit your pricing guidance.”
“If your customers perceive your discount as signaling a lack of confidence in your product’s value, they may not want to buy it at any price.”
“More specifically the typical process steps are as follows: Hypothesis development: Innovation teams start with identifying the white space. They ask questions like “Where can we create and deliver differentiated value?” and “Which markets are underserved?”
29. Zero Base Pricing | By David K. Burt
America’s most successful companies have begun to redirect their product pricing and cost-cutting efforts from merely trying to get the best price from their suppliers to a more rigorous and all-encompassing new concept called Zero Based Pricing.
This new approach, based on the all-in-costs approach to purchasing management, addresses all the phases of a product’s manufacturing process, including its design, the procurement of raw materials and/or the component parts or sub-assemblies, the labor and production equipment, and plant used to manufacture it and its quality. The breadth of Zero Based Pricing even extends to the firm’s relationships with its unions and outside suppliers, the goal of which is to create a partnership to produce the best product at the lowest possible price.
30. The Product Manager's Guide to Pricing | By W. Brian Wanless
The Product Manager’s Guide to Pricing focuses on pricing strategies and tactics for consumer products and services. It outlines the fundamentals of good pricing practices including Value-Based Pricing, using price elasticity data, pricing research, how to develop a pricing strategy, promotional pricing, new product pricing, and global pricing. It provides actual examples of how companies have used effective pricing strategies to improve revenues and profits. It is designed for marketers and market researchers working with consumer products and services who want to get a better understanding of how to make more effective pricing decisions.
31. Commodities and Commodity Derivatives | By Helyette Geman
The last few years have been a watershed for the commodities, cash, and derivatives industry. New regulations and products have led to an explosion in the commodities markets, creating a new asset for investors that includes hedge funds as well as University endowments, and has resulted in a spectacular growth in spot and derivative trading.
This book covers hard and soft commodities (energy, agriculture, and metals) and analyses:
- Economic and geopolitical issues in commodities markets
- Commodity price and volume risk
- Stochastic modeling of commodity spot prices and forward curves
- Real options valuation and hedging of physical assets in the energy industry
It is required reading for energy companies and utility practitioners, commodity cash and derivatives traders in investment banks, the Agrifood business, Commodity Trading Advisors (CTAs), and Hedge Funds.
32. Pricing on Purpose | By Ronald J. Baker
According to getAbstract, “Ronald J. Baker makes a sound economic case that the traditional method of generating prices by calculating costs and figuring in an acceptable profit is outdated and unsuitable for today’s knowledge-based business world. Price differentiation and value-based costing have been around for a while, but Baker’s explanation is useful and nicely written. He explains how different customers will value your product their own way, and how to use that differentiation to make money. In 22 concise chapters, he shows you how to understand your customers better and how to create value that they will buy. By capturing a share of that value you earn profits. Baker has a knack for explaining economic concepts in plain English rather than abstruse textbook jargon – and that’s valuable, right there. Get it, read it, use it and make more money.”
Quotes from Pricing on Purpose;
“Business is not about annihilating your competition; it is about adding more value to your customers.”
“A business does not exist to be efficient – it exists to create wealth for its customers.”
“Resources are useless until a purpose is found for them that people will value…oil was worthless to the farmer until the invention of the combustion engine.”
“Economics is based on the assumption that people have reasonably simple objectives and choose the correct means to achieve them. Both assumptions are false – but useful.” [– David Friedman]
“The last buggy-whip manufacturers were models of efficiency. So what? What happens if you are efficient at doing the wrong things? That cannot be labeled progress.”
“Cost is a fact, pricing is a policy and value is subjective…an organization should devote more of its resources and intellectual capital to creating value, and…set prices to capture that value.”
33. The Future of Pricing | By E. Andrew Boyd
According to getAbstract, “Sometimes the most obvious business practices are the most complicated – and the most interesting. This is the case with airline pricing, so E. Andrew Boyd has chosen a great topic. As an expert in the esoteric field of operations research, he has done business readers a great service by presenting the history, evolution, theory, and practice of airline pricing, and by tracking how it revolutionized pricing in many other industries. Boyd weaves his personal stories and insights about mathematics, gambling, and airline history into a very readable, high-level business book. While this is a seemingly esoteric topic.”
Quotes from The Future of Pricing;
“With decades of accumulated knowledge, airlines continue to play a central role in developing the science of inventory control and pricing.”
“Inventory control is the heart of pricing in the airline industry.”
“Just as we successfully use weather predictions to plan our affairs, pricing systems can be powerful tools.”
“Research into pricing has grown at a remarkable pace in recent years as academics seek to understand the best way to price everything from insurance contracts to groceries.”
“By the 1980s, the airline industry understood what many industries would wait years to discover: The computer isn’t just a record-keeping device, but a competitive weapon in the battle for the consumer.”
“The range of emotions we experience when purchasing an airline ticket is often closer to that of a bidder in an auction than to that of a customer in a retail store.”
Final Thoughts on the Best Books on Pricing Strategy
Often times the most critical business practices are the most obvious, yet, the most complicated. Pricing can be a daunting task and there are multiple ways to get it right. These obvious business practices may be detrimental to any business. Price too low and you’ll price your profits goodbye. Price too high, and watch you,r customers, say good bye. Either way, pricing must be carefully thought out.
Do you see a book that you think should be on the list? Let us know your feedback here.
Meet Maurice, a staff editor at Bigger Investing. He’s an accomplished entrepreneur who owns multiple successful websites and a thriving merch shop. When he’s not busy with work, Maurice indulges in his passion for kayaking, climbing, and his family. As a savvy investor, Maurice loves putting his money to work and seeking out new opportunities. With his expertise and passion for finance, he’s dedicated to helping readers achieve their financial goals through Bigger Investing.