Principles and Pitfalls


  • Price for profit, innovate for growth.
  • Diversify your offerings into high vs. low value. Innovate both up (high-value, high profit features and services) and down (stripped down versions that will protect you against low-cost competitors) to protect your brand.
  • Whenever possible, quantify the value to the customer in dollars and cents, then capture it in your price.
  • Understand the pitfalls of cost-plus (variable vs. fixed costs).
  • Back up your marketing materials with the financial characterization of value.


  • Panic (especially in times of economic downturn).
  • Start or respond to a price war. Learn to compete peacefully.
  • Try to increase sales volume in inelastic markets by using the pricing lever.
  • Feed the beast – create continual expectations of lowering prices by perpetuating price concessions without value tradeoffs.
  • Let your customers dictate your price. The customer is “almost” always right; pricing is an exception.