How are you doing?

How people respond to this simple question can tell a lot about them.

As I continue to learn English as a second language, I am always surprised by the nuances in the English language and by the choice of words that people might use. Let us take a simple question that you may ask a lot of people every day: How are you? Or how are you doing? If you paid attention, you might be surprised by the number of different answers you may get on a single day. On the exuberant side, you will meet the people who will answer “fantastic” or “I could not be better”. On the “the-glass-is half-empty-side” you will find people who will answer “not too bad” or “I am hanging in there”. And in the middle, you will hear a lot of good, great, very well, fine and other potential expressions.

I remember a German Executive asking one my Managers what “not too bad” meant. That was an answer that surprised him a great deal and to the point that he asked this Manager to elaborate more. But in fact, what do “not too bad” or “I am hanging in there” mean? And why would you use that type of wording to answer a simple question? It might be a cry for help? It may have to do with a vision of life or a general attitude to see life from a negative lens and then may be minimizing the negativity. I think the same might go with the “fantastic” answer. What is then the difference between great and fantastic? What would make someone’s life so fantastic on a given day?

Pay attention to the answers people give you when you ask the question. Try it for one day. Then reflect on it. How people respond to this simple question can tell a lot about them. I have paid attention for a while and I am learning a lot. It also reinforces my view that the words we use carry a lot of weight and meaning. “I am doing fine thank you” is my favorite answer. What is yours?

Teaching Pricing One Student at the Time

I have enjoyed teaching strategic pricing to a group of 15 MBA students at Carlow University. I had total flexibility on how to design this class and how to get the students interesting in the topic. I chose to focus on strategic pricing and the critical dimensions of the value and pricing discipline. I designed an 8 week course focusing on strategy, organizational dynamics, psychology of pricing, value-based pricing, value modeling, innovation and pricing and the pricing journey. I stayed away from revenue management, advanced analytics and other quantitative topics.

The feedback from students was positive and they seem to have enjoyed the class. Only 9% of business schools teach pricing as an elective. Chances are that those who do, focus on pricing tactics and analytics. I think this is not ideal. MBA students who get a first introduction to the pricing discipline should not be drowned with formulas and statistics. That will scare the heck out of them. Focusing on the strategic and organizational dimensions of pricing invites students to find out more and take another class later on.

As a Pricing Evangelist, I have trained another 15 students who will be in future leadership roles and will have received pricing training. The seeds are planted. They have unique knowledge in their possession and can now compete for better and greater roles in finance, marketing or leadership. The role of a Pricing Evangelist is to spread pricing knowledge one person at the time. Join me to spread the pricing “gospel”.

Be bold. Join the pricing revolution!

The Psychology of Pricing

Published on June 29, 2013 by Kristi Latorre & Casey Shoub

There are many key factors of pricing and the links to human psychology. Value and the customer’s first impression of a product are a must. A customer must first like a product and feel a positive response and a connection or feel a need to buy. The customer then evaluates the price, and often the price will determine the perceived value of the product to the customer. Research shows us that price primacy ultimately influences the determination of a products value which changed the consumers thinking from “do I like it” to “is it worth it”. The Origin of market price value is also important in psychology. This means that a product may have a starting price which makes the customer engaged and feel they are obtaining a custom product. Most cars are a great example of a starting price offering minimal features and then the price increases with more add -ins and options. This pricing model tends to leave customers thinking they received a customized product and a “good deal”.

Customers tend to have certain behavioral patterns or Bias that alters thinking in terms of pricing and purchasing and retailers know how to mess with our heads. Retailers also sneak in tricks to make us feel we are getting a deal. Free items- always an ulterior motive and they draw you in and you end up spending money. Another is eliminating dollars signs. Instead of $20.00 we see 20. It makes us focus more on the product and not the price. 10 for 10 deals- Supermarkets do this all the time making consumers “think” they have to buy the full 10 to get the deal but no, this is not true 1 or 2 is just fine. Prices ending in 9 or 99 are known as charm prices and lead us to believe we are getting a deal. And the last is the small price font. For some reason, we feel it’s a better deal if the font is smaller. All of these discussions deal with ways we view prices and how companies trick us. Pay attention to this next time your shopping and make good decisions!


The No Contract Plan

Published on June 28, 2013 by Brandi Hudson & Nakia Smith

When T-Mobile made the choice to drop their prices drastically, they never took into account the negative reaction they would receive for it. T-Mobile’s strategy is to compete with no contract service plans, by eliminating contract plans. Now that they have eliminated contracts, they have also eliminated discounts when purchasing phones. Therefore customers must either pay for the phone in full or make a down payment and then the remaining balance is broken up into twenty-four payments that are added onto their monthly bill. Even with the figures showing T-Mobile customers saving the most compared to other phone services, paying the full price for cell phones that come out on a yearly basis was a commitment that made some T-Mobile customers question if it was time to switch services.

The figures are clearly visible that the new plans T-Mobile is offering are a steal; however when a company makes drastic changes it makes customers nervous. There was no gradual time line laid out for customers to help them get adjusted. The problem with the no-contract advertisement T-Mobile has been doing is that it gives the illusion that a customer can walk away whenever they want without paying a cancellation fee that most phone carriers charge. T-Mobile has eliminated the cancelation fee, but if you cancel prior to a customer paying off their new cell phone that was broken up into twenty-four monthly payments, they must pay the remaining balance in full to cancel service. At the end of the day statistics talk. If T-Mobile continues to make drastic abrupt changes and attempts to mask the changes behind new policies, it could be perceived as less valuable to existing and potential customers.

Disruptive Technology & Strategic Pricing

Published on June 22, 2013 by Meredith Neel  & Michelle Lagree

Disruptive Technology & Strategic Pricing – Meredith Neel & Michelle Lagree Disruptive Technology is defined in the book Managing Creativity and Innovation as a “technology that displaces the established technology and precipitates the decline of companies whose business models are based on them. In many instances, disruptive technologies create new markets that start small, but sometimes grow large.” With this being said it is important to remember that disruptive technologies often target a niche market at first, where small numbers of individuals want or need the features or services that are being offered. Because of this niche focus, it is important to price your product or service based on the value you are providing to your customers. Using disruptive pricing can carry risks with it, and has to be carefully evaluated. An unusual example of this is Gillette Razor’s “Dollar Shave Club.” As stated in BusinessWeek, Gillette compensated for the underperforming market by revamping their pricing model. The Dollar Shave Club’s usage-based pricing had customers only paying 1$ a month to shave, which in return provided the customers with a five pack of cartridges for only 1$ (Chernev, 2012). Although this felt like a deal for customers, they were actually paying more than they would if they bought a bulk package of cartridges from Gillette or the competitors. This disruptive pricing strategy was not something long term for Gillette, but helped them grow their market base and keep ahead of the competition with their innovative pricing strategy. Overall, if used in the right way at the right time disruptive pricing can be positive for your company. Because of the potential risks, disruptive pricing requires modeling and testing. To avoid the JC Penney impact, incremental changes is preferred to test for customer adoption and the impact to the bottom line.

Chernev, A. 2012. Rethinking Gillette’s Pricing with Dollar Shave Club. Bloomberg BusinessWeek. Retrieved from:

Harvard Business Essentials (2003) Managing Creativity and Innovation. Boston: MA. Harvard Business School Publishing.

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