The Art of Pricing

1. Pricing is an art not a science.

2. Pricing (and taxation) in the words of a famous French bureaucrat and tax collector is the: "art of picking the maximum number of quills from the goose with the minimum amount of hissing."

3. Prices may be above your costs, below your costs or equal to your costs. Your prices have no relationship to your costs. (Corel Corporation's early days.)

4. The market is alway right even when you think it is wrong. (Just because you have built a better mousetrap doesn' mean much.)

5. Demand has been known to go up if you increase your prices: snob appeal. (Ottawa Apartment Hotel example.)

6. Prices are what a willing buyer and a willing seller freely agree to in competitive markets.

7. Price is a mechanism for rationing goods and services.

8. A price based economy is the worst way to organize a society except for all the other ways yet discovered.

9. Prices are democratic. Dollars don't discriminate.

10. Don't be afraid to name high prices (What They Don't Teach You at HBS.)

11. Realize that by naming high prices you have excluded the mass market.



Twenty Five Steps