Base point pricing is the system of firms setting prices of their goods based on a base cost plus transportation costs to a given market. Although some consider this a form of collusion between the selling firms (it lowers the ability of buying firms to gain a competitive advantage by location or private transportation), it is common practice in the steel and automotive industries. It allows firms to collude by simply agreeing on a base price.
A pricing approach that involves designating a particular geographic location as a basing point and then charging customers as a freight cost from that location to the location of the customer. Or a pricing method in which customers are charged freight cost from a base point; the base point may be chosen arbitrarily, but the location of one of the company's manufacturing plant is commonly used.
The worldâs foremost expert on pricing strategy shows how this mysterious process works and how to maximize value through pricing to 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 donât 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 doesnât 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, Simonâs lifelong journey has taken him from rural farmersâ 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 moreâas a consumer or as a business person. You will never look at pricing the same way again.
The Strategy and Tactics of Pricing explains 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:
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 instructorâs manual, including exercises, mini-cases, and examination questions. The authors also provide a link to Deloitteâs Polaris analytical pricing software, helping students put theory into practice by exploring real-world scenarios.
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:
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.
When The Art of Pricing first came out, The New York Times named it among those business books that âshould have been best sellersâ but got lost âin the shuffle.â
âThe key to getting that additional profit, Mr. Mohammed contends in a clear, conversational tone, is to offer customers a variety of pricing options and allow them to pick the one that works best for themâ¦What is clear from Mr. Mohammedâs book is that it might be easier to produce greater margins by concentrating on the numerator (price) â what you charge â instead of obsessing about costs.â The New York Times
âThe Art of Pricing is an entertaining primer on how to unlock âhidden profitsâ and growth by aligning your productâs price with the value customers place on it.â BusinessWeek SmallBiz
âThis conversational, easy and informative read is worth paying attention to.â Entrepreneur Magazine
âHere is a book that is really âwhere the rubber meets the roadâ pricingâ¦I enjoyed this book because the author wrote a book full of real world examples.â A Jack Covert Monthly Selection,Â 800CEOREAD
Included in the Forbesâ Entrepreneurial Library (10 books that no entrepreneur should be without). âPricing products and services is one of the most crucial, and difficult, decisions that an entrepreneur will makeâ¦he (Mohammed) finds psychological and macroeconomic rules to help readers set prices effectively as they enter the marketplace.â Forbes.com
âA lighthearted, anecdotal, but theoretically sophisticated primer on pricing, highly personal and readable, with abundant illustrations.â Alfred E. Kahn, Robert Julius Thorne Professor of Political Economy, Emeritus, at Cornell University, and former chairman of the Civil Aeronautics Board
âThe Art of Pricing is a âmust readâ for every manager; it will help you better serve your customers as well as make you more money.â Irving Azoff, CEO of TicketMaster and CEO of Frontline Management
âThis book is richly illustrated with stories that show how pricing is as much disciplined science as art, and that masters of this discipline can reap profit while delighting customers. Rafi Mohammed is the da Vinci of pricing!â Robert G. Cross, Chairman and CEO of Revenue Analytics
"Ron Baker is the most prolific and best writer when it comes to pricing services. This is a must-read for executives and partners in small to large firms. Ron provides the basics, the advanced ideas, the workbooks, the case studiesâeverything. This is a must-have and a terrific book."
âReed K. Holden, founder and CEO, Holden Advisors, Corp., Associate Professor, Columbia University www.holdenadvisors.com
"We've known through Ron Baker's earlier books that he's not just an extraordinary thinker and truly brilliant writerâhe's a mover and a shaker on a mission. This is the End of Time! Brilliant."
âPaul Dunn, Chairman, B1G1 www.b1g1.com
"Implementing Value Pricing is a powerful blend of theory, strategy, and tactics. Ron Baker's most recent offering is ambitious in scope, exploring topics that include economic theory, customer orientation, value identification, service positioning, and pricing strategy. He weaves all of them together seamlessly, and includes numerous examples to illustrate his primary points. I have applied the knowledge I've gained from his body of work, and the benefits to meâand to my customersâhave been immediate, significant, and ongoing."
âBrent Uren, Principal, Valuation & Business Modeling, Ernst & Young www.ey.com
"Ron Baker is a revolutionary. He is on a radical crusade to align the interests of service providers with those of their customers by having lawyers, accountants, and consultants charge based on the value they provide, rather than the effort it takes. Implementing Value Pricing is a manifesto that establishes a clear case for the revolution. It provides detailed guidance that includes not only strategies and tactics, but key predictive indicators for success. It is richly illustrated by the successes of firms that have embraced value-based pricing to make their services not only more cost-effective for their customers, but more profitable as well. The hallmark of a manifesto is an unyielding sense of purpose and a call to action. Let the revolution begin."
âRobert G. Cross, Chairman and CEO, Revenue Analytics, Inc. Author, Revenue Management: Hard-Core Tactics for Market Domination www.revenueanalytics.com
In Smart Pricing: How Google, Priceline and Leading Businesses Use Pricing Innovation for Profitability, Wharton professors and renowned pricing experts Jagmohan Raju and Z. John Zhang draw on examples from high tech to low tech, from consumer markets to business markets, and from U.S. to abroad, to tell the stories of how innovative pricing strategies can help companies create and capture value as well as customers. They teach the pricing principles behind those innovative ideas and practices.
Smart Pricing introduces many innovative approaches to pricing, as well as the research and insights that went into their creation. Filled with illustrative examples from the business world, readers will learn about restaurants where customers set the price, how Google and other high-tech firms have used pricing to remake whole industries, how executives in China successfully start and fight price wars to conquer new markets.
Smart Pricing goes well beyond familiar approaches like cost-plus, buyer-based pricing, or competition-based pricing, and puts a wide variety of pricing mechanisms at your disposal. This book helps you understand them, choose them, and use them to win.