Impact Pricing

Tim Hanni is a trailblazer in the wine industry, renowned for his groundbreaking work in wine education, sensory sciences, and his mission to demystify wine for all. With the prestigious title of Master of Wine, Hanni holds the distinction of being one of the first Americans to earn this credential, marking a significant milestone in his illustrious career.

In this episode, Tim shares how perceptions of wine quality are influenced more by psychological and sensory factors than by price, often making expensive wines indistinguishable from cheaper ones in blind tastings. He introduces the concept of "perceptual individualism," explaining how personal differences in taste perception affect wine preferences. Additionally, he highlights the complexities of wine pricing, contrasting the traditional cost-plus approach with the need to consider market perceptions and branding.

Why you have to check out today's podcast:

• Gain insights into wine perception and psychology.
• Discover the challenges of traditional wine wisdom to understand the wine industry's myths and realities.
• Learn a comprehensive view on wine pricing contrasting cost-plus pricing with value-based pricing to help you gain insights into the factors that influence wine prices, including production costs, marketing, and consumer perception.

"There are people who buy out on price alone. If it's more expensive, it must be better. But there's an inverse relationship between price and quality."

- Tim Hanni

Topics Covered:

02:01 - Discussing the unique nature of wine pricing and how it affects consumer behavior

04:19 - Talking about the impact of wealthy individuals, particularly those from Silicon Valley, entering the wine industry, which he describes as being over-premiumized

06:22 - Discussing the challenges of market segmentation in the wine industry, comparing it to the evolution of the tech industry

10:22 - Critiquing the wine industry's elitism and rigidity, using examples to illustrate how misleading some widely accepted norms are

12:18 - The background and story of 'Two-Buck Chuck'

13:52 - Addressing the often-debated relationship between wine quality and price

16:30 - Introducing the concept of "perceptual individualism"

20:13 - Elaborating on a wine study conducted by Frédéric Brochet at the University of Bordeaux in 2001

24:32 - How wine pricing is determined, focusing on what he refers to as the "bottom-up approach."

25:48 - Explaining the complexities of wine pricing and how factors beyond production costs influence the final price of a bottle

28:07 - How the complexity of pricing wine remains somewhat elusive

Key Takeaways:

"The label's not going to make necessarily all that much of a difference in the margin, but the label plus the provenance." - Tim Hanni

"Unequivocally, sweet wine drinkers have the most taste buds. They have the highest perceptual acuity of any consumers at all. And often you are paying an extreme premium for that sweet wine." - Tim Hanni

People/Resources Mentioned:

• Julia Child: https://en.wikipedia.org/wiki/Julia_Child
• Trader Joe's: https://www.traderjoes.com/home
• Fred Franzia: https://en.wikipedia.org/wiki/Fred_Franzia
• Charles F. Shaw: https://en.wikipedia.org/wiki/Charles_F._Shaw
• California State Fair Wine Competition: https://calexpostatefair.com/competitions/california-commercial-wine/
• Joel Butler: https://www.linkedin.com/in/joel-butler-mw-1697667/
• Frederic Brochet: https://www.researchgate.net/scientific-contributions/Frederic-Brochet-2029425754
• California Grape Crush Report: https://www.nass.usda.gov/Statistics_by_State/California/Publications/Specialty_and_Other_Releases/Grapes/Crush/Final/2023/2023_Final_Grape_Crush_Report.pdf
• Robert Parker: https://www.robertparker.com/about/the-rating-system

Connect with Tim Hanni:

• LinkedIn: https://www.linkedin.com/in/timhannimw/
• Website: https://winebusinesseducation.com/
• Website: https://www.myvinotype.com/en/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: [email protected]

This is an Impact Pricing Blog published on July 11, 2024, turned into an audio podcast so you can listen on the go.

Read Full Article Here: https://impactpricing.com/blog/high-prices-and-lost-deals/

If you have any feedback, definitely send it. You can reach us at [email protected].

Now, go make an impact.

Connect with Mark Stiving:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/stiving/

Christine Nicholson has a 25-year experience of running companies in multiple sectors. She started, built, and exited multiple successful businesses. She took a business from £0-£4.5m turnover in 15 months. And she also rescued a bankrupt company from millions in debt to an eight-figure exit in under 18 months. More than just experience, she studied hard to become a Chartered Management Accountant with a law degree, a postgraduate degree in Information Systems Management - and a Professionally Accredited and Experienced Business Mentor.

In this episode, Christine shares valuable insights on several key topics related to business valuation and pricing like the owner's emotional attachment, preparing a business for sale and customer feedback for pricing strategies. She provides a balanced view of how to strategically prepare a business for sale, emphasizing the importance of logical pricing decisions and understanding customer value perceptions.

Why you have to check out today's podcast:

• Gain insights on emotional influence in business decisions to help you make more informed, rational decisions that enhance your company's value.
• Discover actionable tips on how to boost a company's valuation by implementing effective pricing strategies.
• Learn the importance of customer engagement to understand their perception of value for better pricing decisions.

"Go and ask your customers what they think of your service. If you were no longer providing this service, what would they be willing to pay for the level of service that they get from someone else?"

- Christine Nicholson

Topics Covered:

01:02 - How did she get involved in pricing

03:20 - Discussing a common misconception among business owners regarding the value of their businesses

03:51 - Highlighting a scenario of the emotional complexities and the challenges business owners face when selling their businesses

12:22 - The psychological dynamics involved when business owners try to value their businesses and their services

14:37 - Explaining the key factors that sophisticated buyers look for when purchasing a company

17:22 - Deeper motivations tied to personal beliefs and values other than price when selling a business

19:40 - How adjusting pricing is one of the quickest and easiest ways to improve a business

22:05 - Christine's approach to helping companies fix their pricing strategies which involves more than simply raising prices

24:07 - Addressing the emotional and logical aspects of business decision-making

25:36 - Christine's best pricing advice

Key Takeaways:

"When you're talking directly to your customers, you have to talk with your heart because you're dealing with one human being typically to another. " - Christine Nicholson

"...if you get your pricing right, then you're going to make more profits; you're going to generate more positive cash flows." - Christine Nicholson

"When it comes to selling your business, all the heart is with the seller, and all the logic is with the buyer." - Christine Nicholson

"When people put their soul into something, they attach a value to it when they're selling their business; ironically, and completely paradoxically, they don't attach the value of the effort that they put into the business to their customers." - Christine Nicholson

"One of the biggest problems that I see from a selling business is where somebody is mentally associating the value of the business by the effort they've put in, but they're not reflecting that correctly in the way that their pricing to their customers." - Christine Nicholson

"You need to believe the value that you are giving to your client." - Christine Nicholson

"Buyers do not want to buy a job. They are buying an investment that has a hard return on capital. And the more certain they are about the return on capital, the higher the money that they will pay and the faster you'll get the cash in your bank." - Christine Nicholson

Connect with Christine Nicholson:

• LinkedIn: https://www.linkedin.com/in/christine-nicholson/
• Website: https://getexitready.co.uk/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: [email protected]

Patrick Taylor is a global business improvement expert with over 30 years of delivered value leveraging experience across all domains of pricing and margin improvement as well as commercial and financial processes.

In this episode, Patrick shares the critical aspects of effective pricing strategies and their impact on business profitability. He emphasizes the importance of understanding both the external market and customer needs when setting prices. He also advocates for the use of various data visualization tools, such as scatterplots and Pareto charts, to analyze pricing effectiveness and identify areas for improvement.

Why you have to check out today's podcast:

• Gain insights into customer-focused pricing and understand market conditions when setting prices to align pricing strategies with customer expectations.
• Learn about profitability metrics and delve into the significance of monitoring profitability by customer and product.
• Understand sales team dynamics to empower sales teams with the knowledge and tools needed to confidently sell at set prices.

"Listen to your customers, look at your market, look externally first on price."

- Patrick Taylor

Topics Covered:

01:14 - Patrick describing his journey into the pricing world

04:01 - Sharing his insights on how pricing has evolved over the years and his fundamental approach to it

07:22 - Emphasizing on the importance of focusing on customer value rather than getting overly caught up in tools like Excel or AI

08:54 - How to motivate executives to focus more on the value they deliver to customers and the decisions those customers have to make

11:58 - Aligning product offerings with customer needs and maximizing revenue opportunities

13:38 - How convincing a CEO to focus on pricing requires demonstrating that there is a real problem

17:34 - Highlighting the importance of using data-driven KPIs and charts to understand pricing behavior and sales performance and important thoughts about price variance

22:09 - What is it about the Pareto chart that he considers it when doing pricing

26:24 - Discussing the importance of focusing on margin dollars over margin percentages, especially when market conditions dictate pricing

29:14 - Patrick's best pricing advice

Key Takeaways:

"At the end of the day, from a pricing perspective, the customer only cares about two things. They care about the value they get relative to what they're buying and relative to the next best competitive alternative." - Patrick Taylor

"Putting that customer first is the number one thing you've got to do." - Patrick Taylor

"You can create the best model in the world, but if it doesn't work easily for your sales team to work, they can't communicate it to their customer; it's a problem." - Patrick Taylor

People/Resources Mentioned:

• Tom Nagle: https://impactpricing.com/podcast/604-insights-into-value-based-pricing-strategies-for-b2b-with-tom-nagle/
• Alteryx: https://www.alteryx.com
• Google: https://www.google.com/?client=safari
• Tableau: https://www.tableau.com
• Pros: https://pros.com

Connect with Patrick Taylor:

• LinkedIn: https://www.linkedin.com/in/patrickjtaylor/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: [email protected]

David Brown is the author of "Banned Business Books, Volume 1, Pricing," a fictional account that narrates how a marketer and a pricing guru stand up and optimize the pricing function in a company.

In this episode, David shares what his book 'Banned Business Books' is all about highlighting the "Nine Boxes" framework for organizing and executing pricing strategies effectively. He emphasizes the critical role of a Pricing Council in bringing order and clarity to pricing decisions within a company. Additionally, he highlights the value of understanding customers deeply and segmenting them to optimize pricing and business outcomes.

Why you have to check out today's podcast:

• Deep dive into the nine boxes framework, a comprehensive tool for organizing and executing pricing strategies.
• Learn the critical importance of understanding your customers as the foundation for effective pricing.
• Discover how to set up a pricing council and navigate the challenges of pricing in different organizations.

"Don't start thinking that you're going to figure out pricing by looking at margins; start with the customers."

- David Brown

Topics Covered:

01:34 - Sharing his pricing journey

03:31 - Discussing the role of finance professionals in relation to pricing and how their focus is on defending and improving margins

06:22 - What made him title his book as Banned Business Books

08:51 - Addressing a critique from Mark about the applicability of his book's content

10:26 - Elaborating on the origin and development of his "nine boxes" framework for pricing

14:09 - Discussing how different aspects of pricing, such as packaging and portfolio optimization fit within his "nine boxes" framework

16:02 - How he continues to use the "nine boxes" as a way to organize and prioritize pricing projects, especially when collaborating with a pricing council

18:07 - Sharing his insights on establishing and maintaining an effective pricing council

20:08 - Agreeing that pricing is a critical function and is often a new and somewhat undefined role

21:04 - Proposing the idea of a pricing council to a CEO

23:08 - David's best pricing advice

25:29 - What the Volume 2 of his book series will focus on

Key Takeaways:

"Price setting is critical; that's where you have the opportunity to start claiming the value that you deserve for your innovations." - David Brown

"The main thing that the Pricing Council has to have is energy and a purpose; the ones that do the best have a clear mandate, meaning that the decisions that the council takes on price are carried out and are effective across the company." - David Brown

"You want to speak with the leaders and the potential figures that are going to be in the pricing council first and understand what makes the company tick and what needs to be fixed before you start fixing things." - David Brown

People/Resources Mentioned:

• Unilever: https://www.unilever.com.ph
• Mosaic: https://www.mosaic.com/sustainability
• American Express: https://www.americanexpress.com
• Netflix: https://www.netflix.com/ph-en/
• Blackberry: https://www.blackberry.com/us/en

Connect with David Brown:

• LinkedIn: https://www.linkedin.com/in/dbrown14/
• Website: www.bannedbusinessbooks.com

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: [email protected]

This is an Impact Pricing Blog published on July 4, 2024, turned into an audio podcast so you can listen on the go.

Read Full Article Here: https://impactpricing.com/blog/understanding-fencing-googles-strategy-to-maintain-regional-pricing-for-youtube-premium/

If you have any feedback, definitely send it. You can reach us at [email protected].

Now, go make an impact.

Connect with Mark Stiving:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/stiving/

Kristen Berman co-founded Irrational Labs, a behavioral product design company, with Dan Ariely in 2013. Irrational Labs helps companies and nonprofits understand and leverage behavioral economics to increase the health, wealth and happiness of their users.

In this episode, Kristen explores the intricacies of pricing strategies, emphasizing the importance of understanding behavioral economics to influence consumer decisions effectively. She discusses how techniques like the decoy effect, anchoring, and the power of price endings (like 99 cents) can drive customer behavior. Additionally, she highlights the challenges of pricing revolutionary products due to the lack of reference points and the creative approaches needed to establish them in the market.

Why you have to check out today's podcast:

• Deep dive into pricing strategies like the Good-Better-Best model, the Decoy Effect, and the psychology behind price ending to help you understand how to make pricing decisions that drive customer behaviors and increase sales.
• Find out valuable perspectives on how human psychology influences purchasing decisions which is essential for anyone looking to optimize their pricing or marketing strategies.
• Discover practical advice and real-world examples to see how you can apply these concepts to your own business.

"It's all relative. So, what are customers using as a reference point? If it's off your product site, then you need to help them create a new reference point within your product site."

- Kristen Berman

Topics Covered:

01:14 - Sharing how she transitioned into behavioral economics from her role as a product manager at Intuit

03:42 - How behavioral science tie to pricing and product

06:10 - An example of how behavioral economics influence product decisions

08:50 - Explaining the concept of the "paradox of choice"

11:35 - Turning the path of least resistance into the preferred choice

14:30 - Simplifying decision-making for customers with the concept of "good, better, best" product offerings

16:42 - Explaining the decoy effect and how it influences consumer decision-making

19:09 - The reason behind the presentation of pricing options in the context of behavioral economics

22:43 - The concept of framing in sales in the context of product features and the importance of trials in subscription-based models

25:25 - How people often rely on heuristics, or mental shortcuts, when making decisions about prices

28:56 - Kristen's best pricing advice

29:28 - Various sources of reference points

31:19 - The challenge of pricing revolutionary products due to the lack of existing reference points

Key Takeaways:

"People don't come in with an understanding of the exact thing that they want to purchase at the exact moment. And so, our job is to help them understand value, and choice helps people understand value." - Kristen Berman

"We're using the heuristics on how big the number is to make a lot of fairness decisions." - Kristen Berman

"We are relative creatures. We have reference points and we use our reference points to understand value. And so, it's not just the price, it's the reference point that we're using." - Kristen Berman

People/Resources Mentioned:

• Intuit: https://quickbooks.intuit.com/
• TikTok: https://www.tiktok.com
• Airbnb: https://www.airbnb.com
• Dan Ariely: https://danariely.com/all-about-dan/
• One Medical: https://www.onemedical.com
• Steve Jobs: https://en.wikipedia.org/wiki/Steve_Jobs
• Apple: https://www.apple.com/
• YouTube: https://www.youtube.com
• Netflix: https://www.netflix.com/
• Study: https://play.google.com/store/apps/details?id=com.thesoundagency.study&hl=en_ZA&pli=1Shopify: https://www.shopify.com/ph

Connect with Kristen Berman:

• LinkedIn: https://www.linkedin.com/in/kristenberman/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: [email protected]

This is an Impact Pricing Blog published on June 27, 2024, turned into an audio podcast so you can listen on the go.

Read Full Article Here: https://impactpricing.com/blog/how-to-charge-different-customers-based-on-value-received/

If you have any feedback, definitely send it. You can reach us at [email protected].

Now, go make an impact.

Connect with Mark Stiving:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/stiving/

Florian Bauer is an internationally sought-after expert and speaker on the subject of price psychology and behavioral pricing. He is an honorary professor at the Technical University of Munich and author of several books on price research. He also has a doctorate in Psychology at TU Darmstadt, MIT, and Harvard.

In this episode, Florian talks about how discounts can give you short-term gain but cost you long-term. He underscores that there are other means to incentivize customers without diminishing a products' value perception. And that cashback is one thing to consider other than discounts. He also talks about buyers' irrationalities and how to use Behavioral Economics to influence their decision-making and let it work in your favor.

Why you have to check out today's podcast:

• Learn about the psychology of price structure and how it influences consumers' buying behavior
• Find out what you can, what you should, and what you should not do when giving a discount
• Learn how Behavioral Economics can help you influence buyers' decision-making and maximize your company's profit

"If you want to price or sell something, you have to think in two dimensions. You have to think about what people want. That's the traditional value-based approach. And you have to think in the dimension of how they decide."

- Florian Bauer

Topics Covered:

01:28 - How Florian got started in Pricing

02:25 - What the psychology of price structure is all about

03:22 - What a price structure looks like

04:12 - What's the psychology behind using cashback than just lowering the price

06:03 - How do discounts differ from cashback

07:39 - The feeling of disconnect with cashback

08:20 - Cashback being an icing on the cake that can potentially make you feel more decided about your choice

10:02 - What's the disadvantage of discounting

11:36 - What behavioral economics means for pricing

16:15 - Different people behave differently when it comes to decision irrationalities

18:00 - His thoughts on the ethical issue about Behavioral Economics

23:22 - What is Behavioral Economics showing us and why this works in the B2B world

25:38 - How heuristics simplify complex decisions

29:35 - Florian's best pricing advice that can significantly impact your business

Key Takeaways:

"Never ever give a discount without anything the customer has to give in return." - Florian Bauer

"That's the issue with discounting. It really works very well short-term. So, you have to gain short term, but you have to cost long-term." - Florian Bauer

"If I want to sell somebody something, I need to know what he wants, or she wants, and I need to adapt my sales approach and my pricing model, potentially, to how he decides." - Florian Bauer

"For me, the purpose of marketing, pricing, and sales is to influence decisions. So, there is no reason to have a marketing campaign or a marketing team if you would not have the idea that I can influence my customers' decision in my favor." - Florian Bauer

"I think when we talk about value and price acceptance, it's very much a story. And there is not one story better than another one. People hate to make decisions, they want to be made decided and with some stories, they are quicker in deciding than in others." - Florian Bauer

"Think about that you're not only selling value; you're also managing decisions. If you keep that in mind when you design your pricing model, you also avoid the traditional clash between pricing and sales because you're also able to tell your salespeople how they can actually execute your pricing strategy to make the customers actually follow the decision or the directions you want them to." - Florian Bauer

Resources / People Mentioned:

• Daniel Kahneman: https://en.wikipedia.org/wiki/Daniel_Kahneman

Connect with Florian Bauer:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/profdrflorianbauer/

Connect with Mark Stiving:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/stiving/

This is an Impact Pricing Blog published on June 20, 2024, turned into an audio podcast so you can listen on the go.

Read Full Article Here: https://impactpricing.com/blog/revamp-your-pricing-strategy-pros-cons-of-4-popular-models/

If you have any feedback, definitely send it. You can reach us at [email protected].

Now, go make an impact.

Connect with Mark Stiving:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/stiving/