Pricing Optimization

How do you set prices today?  Generally, when I ask potential clients this question, they tell me they set prices to match their competitors, only 5% less.  This is a terrible pricing strategy.  As a small company, it is extremely unlikely that you will be...

So how do airlines use pricing to get the most money when everyone who wants to fly seeks to spend as little money as they can?  Airlines offer bargain fares under certain conditions but they can’t make any money if they filled the plane with...

Some department stores use pricing to drive you to buy now, in other words-urgency.  They have lots of short single day, weekend or three day sales.  These sales are generally not on everything, but a lot of items are included.  Most often, they send out...

It is pretty obvious how large retailers use price to drive sales volume.  They claim to have the lowest prices for everything.  Companies like Walmart do have low prices.  They are huge, they buy in massive volume and they pay the lowest prices for everything...

You may have gone to a movie theatre on a weekday afternoon and found very few people there.  You might even ask yourself why they bother to be open.  The answer is simple economics.  Movie theatres have a lot of fixed cost-Rent, utilities, etc.  The...

Pricing Fast food restaurants use pricing to drive your behavior.  Most people are familiar with a selection of food offerings at Fast Food restaurants that are heavily discounted.  These have many names such as the Dollar Menu or the Value Menu, etc.  The restaurants are trying...

For the next couple of posts, I will be telling you about how large companies use pricing to drive your behavior in ways that benefit them. Everyone is familiar with how most cars, SUVs and trucks come in different trim levels.  The higher the trim level,...

An effective pricing strategy is one of the most powerful tools any company has to increase profitability.  Very importantly, it is a business tool completely within your control.  You can use pricing to drive customer behaviors into patterns that increase profitability.  Specifically, pricing can be...