Too often prices are overly determined by a mark-up on costs or what competitors are charging, rather than an informed judgement of what customers will pay. A number of tips for smarter and higher pricing are suggested.
'Price stairways' counter the need to have competitive base prices: link the latter to tougher conditions and offer better features for price increments.
Defending against value-oriented competitors need not be about price-cutting - instead, identify critical benefits that customers forego with such offerings and respond with propositions based on those benefits. And lessen customer resistance to price increases by bringing in new benefits.
The Ashridge Journal, spring 2006
Review by Steve Lodge