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The Strategy and Tactics of Pricing

A Guide to Growing More Profitably

By Thomas Nagle, John Hogan & Joseph Zale
15-minute read
The Strategy and Tactics of Pricing: A Guide to Growing More Profitably by Thomas Nagle, John Hogan & Joseph Zale

The Strategy and Tactics of Pricing (2010) reveals the fundamental importance of how you price your products. By exposing common misconceptions, explaining the three dimensions of effective pricing and the five steps you can take to achieve it, these blinks are an essential guide to maximizing your profits through clever pricing.

  • Business students hoping to understand the underlying principles of pricing
  • Entrepreneurs planning to launch a new product and struggling to find the right price
  • Any shopper curious about how price tags are set

Thomas Nagle, John Hogan and Joseph Zale are industry leaders in strategic pricing, having made significant contributions to the theory and practice of pricing, as well as the development of software to aid businesses around the world. Hogan and Zale are partners at Monitor Deloitte, a leading strategy consulting practice based in Cambridge, Massachusetts.

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The Strategy and Tactics of Pricing

A Guide to Growing More Profitably

By Thomas Nagle, John Hogan & Joseph Zale
  • Read in 15 minutes
  • Contains 9 key ideas
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The Strategy and Tactics of Pricing: A Guide to Growing More Profitably by Thomas Nagle, John Hogan & Joseph Zale
Synopsis

The Strategy and Tactics of Pricing (2010) reveals the fundamental importance of how you price your products. By exposing common misconceptions, explaining the three dimensions of effective pricing and the five steps you can take to achieve it, these blinks are an essential guide to maximizing your profits through clever pricing.

Key idea 1 of 9

The art of pricing is an essential element in today’s economy.

You might not have noticed, but pricing has become quite a hot topic over the last few years. Why? Well, as a result of the information revolution, we consumers have become more aware of and more sensitive to pricing.

These days, information on the products or services any company has to offer is at our fingertips. By now, many of us are seasoned online shoppers and are quite accustomed to the process of comparing product after product until we find the one we think is best for our budget.

In light of this, many companies have placed pricing at the heart of their commercial strategy. Take the Apple iPhone, for instance. This revolutionary smartphone was considered overpriced when it was first released.

However, knowing that early adopters and tech-obsessed customers wouldn’t mind paying a high price for such a unique product, Apple wasn’t deterred. They kept their high pricing and, in doing so, created a reference point for the market sector and for their entire product range. Later on, when Apple slightly decreased the price of the iPhone, customers viewed this as a brilliant bargain, and sales soared once again.

Retail giant Walmart also owes much of its success to clever pricing. Items that everybody needs, such as toilet paper or disposable diapers, are massively discounted, ensuring that Walmart is the first place customers will head to buy them.

Because competitors can’t afford to lose their profits on essential products like these, Walmart avoids a price war. And because so many customers are buying their everyday items across a vast network of Walmart stores, the discounts aren’t likely to jeopardize their profits. Other items are then priced higher, which allows Walmart to recoup their losses.

Apple and Walmart teach us an important lesson about strategic pricing. It’s not about tweaking prices to perfection, nor is it about selling as much as possible; rather, great pricing strategies are focused on increasing profitability in innovative ways.

Unfortunately, many companies fail to grasp this and make plenty of pricing blunders. In the next blinks, find out which pricing mistakes you should avoid.

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