Pricing on Purpose

Creating and Capturing Value

Ronald J. Baker

Publisher: Wiley, 2006 , 374 pages

ISBN: 0-471-72980-9

Synopsis:

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In an effort to improve profits, most modern businesses have already implemented cost-cutting or reengineering initiatives and instituted measures to improve productivity. Yet few have analyzed the factor that can have a significantly larger impact on profitability- pricing. A unique reference that focuses solely on the art of pricing, Pricing on Purpose provides business executives with a comprehensive understanding of the meaning of value and a guide to strategically pricing their products or services in order to improve profitability.

The book represents the theory of value — long established in economics — and details how any business can use various pricing strategies to create, communicate, and capture the value of their products and services. It takes a new approach of focusing on the external value as perceived by the customer and advocates matching price to value. Written in everyday language so it's valuable to beginning executives as well as professional pricers and marketers, it covers:

• What and how people buy
• The fallacy of commodity thinking
• The five Cs of value
• The market share myth
• The difference between cost-plus pricing and value pricing
• A comparison of the Subjective Theory of Value and the Labor Theory of Value
• Customer segmentation strategies

Complete with examples from a multitude of industries and successful entrepreneurs and peppered with quotes from business experts as well as economists, the book is not a dry treatise on an ethereal economic theory. If the purpose of your business is to add value to customers in order to earn profits, this book can be incredibly valuable to your business!

Table of Contents:

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1. Why Is Movie Theater Popcorn So Expensive?
2. Why Are We in Business?
3. Mind Over Matter
4. The Old Business Equation
5. The New Business Equation
6. Ninety-Nine-Cent Pricing, Engagement Rings, and the Assumption of Rationality
7. The Invisible Hand: No One Person Knows How to Make a Pencil
8. A Tale of Two Theories
9. Cost-Plus Pricing's Epitaph
10. The Wrong Mistakes
11. Price-Led Costing Replaces Cost Accounting
12. What and How People Buy
13. The Value Proposition
14. The Consumer Surplus and Price Discrimination
15. Customer Segmentation Strategies
16. Price Discrimination in Practice
17. There Is No Such Thing as a Commodity
18. Baker's Law: Bad Customers Drive Out Good Customers
19. Ethics, Fairness, and Pricing
20. Antitrust Law
21. Who Is in Charge of Value?
22. Pricing on Purpose: Getting paid for the Value Your Company Creates