Researching pricing theory for a recent post, I pulled a range of articles out of the archives (that is, the file cabinets in my office). As publishers brush up their skill sets in this area, I thought compiling a brief pricing bibliography might be helpful.
As a good overview, Benson Shapiro’s 2003 Working Knowledge article, “Commodity busters: Be a price maker, not a price taker” outlines seven key considerations. Among those, “Deliver on your promise” becomes increasingly important as publishers set prices and perhaps even sell directly.
From 2001, Joel E. Urbancy’s short Harvard Business Review (HBR) article, “Are your prices too low?“, cautions that “managers tend to make pricing decisions based on current costs, projected short-term share gains or current competitor prices, rather than on long-term profitability”.
Publishers planning pricing experiments should read “Mind your pricing cues“, by Eric Anderson and Duncan Simester (HBR, September 2003). Their work applies to both price and promotion, and it categorizes customer groups by certain purchasing behaviors and product attributes. The authors also address tracking effectiveness.
Covering more than just price, the December 2008 HBR article, “Nudge your customers toward better choices“, offers an extended decision tree for setting defaults that the authors categorize as “mass” (e.g. the use of DRM restrictions) and “personalized” (e.g., preferred types of books).
Although it is tempting to simply recommend “anything by Ted Levitt”, a particular favorite is “Marketing success through differentiation – of anything” (HBR, January – February 1980). As Levitt wrote, “Customers attach value to a product in proportion to its perceived ability to help solve their problems or meet their needs. All else is derivative.”
There are also a variety of newsletters that consistently address price as an issue. Typical articles cover topics like “Seven ways to break the discounting habit” and “It’s not about price: Getting prospects excited about doing business with you”.
The newsletters sometimes focus more on industrial than consumer sales, but there is value in learning how other markets are responding to pricing challenges. I prefer the more researched content in publications like HBR, but the shorter-form newsletter content can be helpful in some cases.
I’ll update this post if I come across any other resources that offer value around pricing, price testing and market assessments.