Which way to the bank that accepts a deposit of market share?

Is there “pricing logic” behind the current price war being fought between Coles & Woolworths?

Pricing theory tells us that there are three situations where a price war may make sense, none of which support the strategies pursued by the two supermarkets.

Price wars make sense when there is a ‘format’ on the line. Sony’s Blu Ray technology won the format war against Hitachi’s HD-DVD when the former dropped prices aggressively. There is no format war in Australian supermarkets: with the exception of Coles at the Melbourne Showgrounds, they all make you walk to the back of the store to get the milk.

The second situation is where there is an opportunity to pick up significant volume or customer numbers at a “trigger” price. This happened in the broadband price war of 2004, when Telstra dropped prices to $29.95. Everybody has milk today, whether it’s at $1 a litre or $2 litre, but only 500,000 households had broadband Internet access back in 2004.

The third situation where price wars make sense is where one competitor has a distinct cost advantage over another. In India several years ago, Bajaj Auto started a price war with Hero Honda, knowing that regardless of the latters selling price, they had to send a fixed price royalty payment back to Honda in Japan.

So is the only logical conclusion we can draw from the supermarket price war, from a pricing perspective, is that the winners are the customers, and it’s all about market share?

Sadly, there is no bank in the world that accepts a deposit of market share. And while consumers may be the winners in the short term, the same cannot be said about the long term.

In his 2004 book The Paradox of Choice, Barry Schwartz found his local supermarket stocked 175 different salad dressings, 275 different breakfast cereals, and 360 different hair products (shampoo’s, conditioners and the like).

This paradox of choice is already starting to disappear from Australian supermarkets: Greenseas Tuna and Victoria Bitter has already disappeared from some retailers’ shelves.

The suppliers that survive may be forced to cut out the middlemen and sell direct via farmers markets for example, the number of which have doubled since 2004.

And as a keynote speaker warned at the recent National Sustainable Food Summit, artificial food factories may replace those suppliers that don’t survive. And then we’ll be wondering what everything we eat is, not just chicken nuggets.

[This post also appears on LeadingCompany, 26th April 2012]

10 Pricing Lessons from Cartoons

Wouldn't you know it. As soon as I upload "Ten Pricing Lessons from Cartoons", I find another great pricing -related cartoon.

The Deer Have Now Got Guns

The French have always loved their food. So its hardly surprising that rising food prices, amongst other factors, contributed to the French Revolution of 1789 -1799. Several decades later, a Frenchman started another, less well known revolution: a pricing revolution.

Louis Auguste Boileau was a retailing visionary, many years ahead of his time. He had a vision of a social retailing experience for the women of 19^th century Paris, and engaged Gustave Eiffel to build the world’s first department store, Bon Marche.

There were two other things that were revolutionary about Bon Marche. Boileau decided that the goods for sale would no longer be kept behind a counter. They would be spread out across the shop floor so women could handle the goods and think they were ‘within their grasp’.

This made it difficult for sales assistants to say to customers “you can’t afford that, have a look at this instead”, which had previously been the practice. Boileau solved this problem by putting the price on each article, creating the price tag. Frank Woolworth and Aaron Montgomery Ward (inventor of the mail order) loved the idea of price tags so much, they introduced them in America shortly thereafter.

It’s unclear whether these two initiatives lead to the development of “vanity price points” (e.g. FFR 9.95), but it is possible.  One of the reasons for the popularity of such price points is the audit function they perform: the shop assistant has to give the customer change, rather than just slipping a 10 franc note in their pocket.

Today, there is a new revolution in retailing: the Internet. At the moment, customers are better at harnessing its powers against retailers, than retailers are against customers, with what I call “the deer have now got guns” syndrome.

The ‘guns’ shoppers are using include price comparison websites, and smart phone and tablet apps that let them find and buy the cheapest products online. Retailers are still working out how to respond to this.

From a pricing perspective (and pricing is not the entire problem), a good place to start would be for retailers to take a leaf out of their customer’s books and embrace technology. This would include apps for sales floor staff, linked to CRM (Customer Relationship Management systems), and price-setting technology which has been around for many years now.

But it could also include a new breed of pricing technology that has taken off in the last two years, that of competitive price intelligence and monitoring platforms, such as that offered by the likes of UpstreamCommerce.

Retailing is looking for its next Boileau. Fighting fire with fire is one place to start.

[This post also appears on LeadingCompany, 12th April 2012]

The Beer on the Beach Experiment (Re-visited)

By Greg Eyres, Consulting Director at PricingProphets.com

In the 1980’s or 1990’s (I can’t remember which), the Chicago University –based Behavioural Economist Richard Thaler conducted what has become known as the “Beer on the Beach” price experiment.

He asked participants in the research how much they would be prepared to pay for an ice cold beer purchased from a run-down corner store at one end of a beach, and what they would be prepared to pay for an ice cold beer from the upmarket hotel at the other end of a beach.

As you would expect, participants were prepared to pay more when the beer was purchased from the latter, vis-a-viz the former. But as I discovered last week, this is not quite what happens in Fiji.

I was staying at a 3.5 star resort on one of Fiji’s many islands.  Very much marketed as a family resort, it offers just about everything a family could want.  It sits on a bay with spectacular views from the bar and restaurant. Most importantly, it offers a Kids Club where the ankle-biters can enjoy time away from their parents. 

At the other end of the bay is another resort that is much more marketed to couples and honey-mooners.  It is a 4 star resort that again offers spectacular views of a tropical paradise.

A glass of the house wine at the 3.5 star resort costs $11 (Fiji dollars).  What do you think a glass of the house wine costs at the 4 star resort?  Well, to my way of thinking, it would be reasonable to expect that it would something more than $11 - maybe $15.  Probably a better quality wine and a more exclusive and tranquil setting.

In fact, the 4 star resort charged us $5 for glass of the house wine.  Why?  Have they made a reasoned decision or are they pricing incorrectly?

At the 3.5 star family resort, what is the value of the glass of wine?  Mum and Dad have saved up all year for the annual holiday, the 2 kids are in at Kids Club, the sun is shining and they are finally starting to relax.  Are they going to pay the $11 or walk for 10 minutes to the other resort, where they can’t charge their drinks to their room?  Easy answer – they ain’t walking!  What they are really paying for is relaxation and a chance to unwind.  Walking around to the other resort will cut into that time and as any parent knows, that time is golden.

So, what of the 4 star resort?  My wife reliably informs me that the wine there was not as good a quality, although reasonable enough.  It is a beautiful setting and the accomodation and common areas are certainly of a better standard.  Why are they serving lower quality wine at a low price?  It clearly looks like a case of offering the wrong product at the wrong price.  A low quality, low price wine is incongruous with the quality of a 4 star resort.  They should be offering a premium wine at a premium price. 

In contrast to the 3.5 star resort, this resort is selling quality and quality products.  Pricing should reflect quality.  They may even attract a few mums and dads from the other resort who are seeking a better wine.

Having said all that, I don’t drink wine so it makes no difference to me.  I had a great time relaxing and snorkeling … while the kids were at Kids Club.

PricingProphets on Sky News

I was on the Sky News Tech Report today (Mon 2nd April) talking about Pricing and PricingProphets.com. We hope to post a video of the interview shortly, but in the meantime, here's a happy snap of Brooke & myself

Selling goods as a service

Inventory isn’t something companies want to sit on. You want to sell it as quickly as possible and turn it into revenue – not pay for it to be sitting in a warehouse. Why not turn your unsold goods into a service?

This month, a friend invited me to opening night of an exhibition by a renowned Melbourne-based artist. As we viewed the 23 pieces on display, Bob started telling me about the artist’s business model.

I was a bit surprised to hear of an artist with a “business model” – especially one with its own three letter acronym, ICE, which stands for (seek) Inspiration, Create (the art) then Exhibit (and hopefully sell) it.

But what I found more surprising was that the artist was sitting on 300-400 unsold pieces of artwork, which they valued at $1 million. What sort of business would sit on $1 millon worth of unsold inventory?

Believe it or not, this got me thinking about aircraft engines. Rolls Royce and other engine manufacturers ceased selling them years ago, and now sell “power by the hour” service contracts.

The case for selling art as a service, to display in corporate offices and boardrooms, using a subscription pricing model, is a very compelling one.

The client can enjoy a change of scenery every three months or so, and they can expense the cost, rather than capitalise the purchase of the artwork.

In the case of the artist, they retain ownership of their artwork and the utilisation of their unsold inventory starts to generate a revenue stream, rather than a lump sum that would be earned on selling the art. Potentially, the artist could earn more revenue from “renting out” their artwork, rather than selling it.

Selling a good as a service is a great way to generate income from unsold inventory. What unsold inventory do you have lying around that you can sell as a service?

[This post also appears on LeadingCompany, 29th March 2012]

How do you price legal services...?

Hat Tip: We would like to thank our lawyer for sending us this. 

And for the record, he doesn't charge by the hour. Thats why we use him

The Sound of Silence

Silence isn’t a sound that most leaders want to hear in the aftermath of their pitch for new business. Still, if customers don’t immediately sign on the dotted line, silence is the second best reaction. Let me explain.

I recently sat down with the managing director of a company who wanted to discuss his pricing over lunch. We chatted about things like the value he delivered, recent sales performance and the cost and frequency associated with updating his service.

Then we got to the heart of the matter. Peter had recently achieved some big wins: some of the biggest companies in his target market had taken a three-year subscription to his top-of-the-range product.

But why weren’t the other companies in his target market following suit? They had seemed impressed with his pitch and the product on offer, but they had gone quiet. That left Peter worrying that his price was too high, and maybe he should drop it.

I suggested to Peter that the sound of silence was not a reason to drop his price. In fact, the opposite is usually the case: customers won’t remain silent if the price is too high.

I suggested a different response to Peter: he should reduce the number of products in his product ladder from six to five, making it easier for customer to choose which product to buy. It was an idea that appealed immediately, and we finished our Malaysian spread with Peter in a more jovial mood.

Like that lunch with Peter, this blog is all about practical pricing advice.

It is more than just the dollars and cents; pricing can mean the difference between success and failure. It is at the heart of every company’s business model, but is often forgotten and poorly managed.

There’s going to be a lot to talk about, so hats off to the team at LeadingCompany, the first Australian media outlet to devote a regular column to the topic of pricing.

[This post also appears on LeadingCompany, 15th March 2012]

Click Here if You “Like” Behavioural Pricing

Imagine, sometime in the not too distant future, scanning the contents of your supermarket trolley. The self-service register totals your purchases to £175.25, and then asks you to scan your Facebook Card (Tesco Clubcard was wound up a couple of years before this). The electronic voice from the cash register now asks you “How would you like to pay for your £214.89 of groceries: cash or credit?”.

If recent sensationalism[1] is to be believed, this is what retailers will start to do: charge you more because you’re a Facebook fan or Twitter follower of certain companies and brands.

Retailers everywhere could be excused for paying attention. Most of them are doing it tough at the moment for a whole host of reasons which (in Australia) includes a slow down in demand, the high Australian dollar, and the exodus of consumers to online shopping sites, just to name a few.

To all the retailers reading this, we apologies for being the bearer of bad news, but we just cannot see this happening. Let us explain why:

• What does “Liking” on Facebook really mean? It means someone has clicked a button, that's all, and probably moved on. It does not indicate a preference for one product over another, and it certainly does not involve any sort of sacrifice, financial or otherwise;

• It assumes that companies will have an information advantage over consumers. Yes, one or two retailers may have made some gains in this area (Amazon springs to mind), but so far, the internet has been better used by consumers to find out what’s going on in marketers minds, rather than the other way round;

• History is not on behavioural pricing’s side either. Speaking of Amazon, remember their failed DVD pricing experiment, where they tried charging customers different prices (-30%, -35% & -40%)? Consumers didn’t take too kindly to that and despite the cost being small (an average refund of $US3 paid to 6,896 customers), damage to goodwill was far greater;

• The claim that the behavioural pricing revolution will happen this year is just over-hyped sensationalism. Airlines have taken 40 years to master the art and science of passengers sitting next to each other (and talking about the differences in fares paid

Yes, the Digital Buzz Blog did publish figures that said that the average annual spend by a McDonald’s Facebook fan was $159.79 more than a non-Facebook fan ($310.18 vs. $150.39 respectively), but it did not report that this was due to higher pricing. It could be explained by larger and/or more frequent purchases.

Retailers should not misinterpret “Liking” or “Following” as a signal to charge customers more. Nothing could be further from the truth. Behavioural Economics (not to be confused with behavioral pricing, as it has more credibility) has taught us that the pain of a loss is approximately twice as potent as the pleasure of a gain (a discount). And according to a late 2011 report from The E-Tailing Group, 63% of consumers ‘Like’ a retailers Facebook page for the possibility of getting a deal or a discount. Consumers are not going to sign up to pay more!

So what’s going to happen? We think there are a number of scenarios and implications for retailers:

• There will be a clash of paradigms: in the one corner will be companies that continue their price-based strategy, using services like Groupon & Living Social, and making sure they have the most competitive prices in Amazon’s PriceCheck App and their ilk. In the other corner will be companies that adopt behavioural pricing technology. That's going to be a battle worth watching.

• If and when large organisations adopt behavioural pricing technology, should small retailers (SMEs) be worried? We don’t think so. Not adopting behavioural pricing will give you a competitive advantage, but the big guys may not allow that to go unchecked for too long.

If the activities consumers participate in online results in a lighter wallet or purse, it will not be long before consumers change their behavior. The basic fundaments of pricing will be the same as they are today.

---

[1] See: The Mail Online, The Next Web and StartupSmart

Are you selling what your customer buys?

Interesting question isn’t it? But what am I talk about? I don’t often talk about my own purchasing decision, but hear me out on this one.

On Friday 10^th February, I picked up four rear window stickers for our company’s fleet of cars. Actually, I exaggerate a bit there: our business doesn't have a fleet of cars: they’re our personal cars, but hopefully we can now claim a portion of their usage as a legitimate tax (advertising) deduction.

The stickers are 600mm x 150mm and read “Are you pricing right? Ask…www.PricingProphets.com”. I estimate the stickers will last maybe two years, and they cost $A44 each.

Over those two years, a lot of people should see those stickers. If I wanted to be more precise, I could ask my friend, Peter Buckingham at SpectrumAnalysis exactly what the likely audience would be. Lets say 1,000 people a month see the stickers: that's 24,000 ‘views’ over my estimated life of the stickers.

Where have you heard that term ‘views’ before? Online advertising of course, where a view is also commonly called a page impression. Online advertising is a hit-and-miss affair: when was the last time you clicked on (never mind noticed) a banner ad? The stickers on the back of our cars are a bit hit-and-miss as well, but if you’re stuck behind my car at the traffic lights, I think you’re going to be a bit more intrigued by the sticker than you would if you saw it as a banner ad on a website.

But what’s more intriguing is that if I ran a banner advertising campaign, I would probably be charged around $40 CPM, which stands for cost-per thousand views or page impressions (the M being the roman numeral for one thousand).

This brings me full circle back to my opening question: are you selling what your customer buys? The company that I purchased the stickers from sold me four stickers and priced them accordingly. But what I actually purchased was an advertising product. What he sold me was not what I was buying.

I think we got an absolute bargain and the sticker shop left a fair bit of money on the table. Are you selling what your customer buys?

Track 1: The Pricing Managers Playlist

Money

Pink Floyd

Track 2: The Pricing Managers Playlist

You Can't Always Get What You Want

The Rolling Stones

Track 3: The Pricing Managers Playlist

Money for Nothing

Dire Straits

Track 4: The Pricing Managers Playlist

Money's too Tight to Mention

Simply Red

Track 5a: The Pricing Managers Playlist

Money

The Beatles

Track 5b: The Pricing Managers Playlist

Can't Buy Me Love

The Beatles

Track6: The Pricing Managers Playlist

Price Tag

Jessie J

Track 7: The Pricing Managers Playlist

Hey, Big Spender

Dame Shirley Bassey

Track 8: The Pricing Managers Playlist

The Price I Pay

Billy Bragg

Track 9: The Pricing Managers Playlist

Shopping

The Pet Shop Boys

Track 10: The Pricing Managers Playlist

Lost in the Supermarket

The Clash

Track 11: The Pricing Managers Playlist

Money, Money, Money

Abba

Track 12: The Pricing Managers Playlist

The Boys from the County Hell

The Pogues

Track 13: The Pricing Managers Playlist

Shoppers Paradise

Carter USM

Track 14: The Pricing Managers Playlist

Shopping

The Jam

Track 15: The Pricing Managers Playlist

Shoplifters of the World Unite

The Smiths

Track 16: The Pricing Managers Playlist

Take the Money and Run

The Steve Miller Band

Track 17: The Pricing Managers Playlist

Ka-Ching

Shania Twain

Track 18: The Pricing Managers Playlist

The Bargain Store

Dolly Parton

Track 19: The Pricing Managers Playlist

A Gallon of Gas

The Kinks

Track 20: The Pricing Managers Playlist

How Much is that Doggie in the Window?

Patti Page

Why Accountants shouldn't do Pricing

This is the third in a series of "Ten Things" presentations, in which Jon Manning, the Founder & Managing Director of PricingProphets.com, looks at ten ways to better present your pricing.

Ten Things (Episode 2)

Here's the second episode of PricingProphets "Ten Things" videos, 

in which I look at 10 historical pricing milestones.

Enjoy

Jon

Ten Things (Episode 1)

At PricingProphets.com, we've just launched a series of videos called "Ten Things". In this first episode, I talk about the Ten Things Every Accountant (and their Clients) Should Know About Pricing.

Enjoy!

Jon

Book Review: Impact Pricing

How can anyone possibly write a Pricing book that has two glaring omissions: (1) it does not distinguish between Business-to-Business (B2B) and Business-to-Consumer (B2C) pricing, and (2) it does not talk about price elasticity?

The answer is “very easily”, when you are Mark Stiving and you’ve just published “Impact Pricing”. The book focuses on B2C examples because, the fact is, that's what readers are most familiar with. But readers interested in business markets are not disappointed, as Stiving cleverly illustrates where consumer pricing concepts and strategies apply to business markets throughout the book.

So why ignore price elasticity, with the exception of three paragraphs? Stiving’s response is simple and practical: because he has “never seen a company that really knows its demand curve” (p69)? And you don’t have to take his word for it. As Scott McNealy, former CEO Sun Microsystems, once said: “Pricing [is] confusing for us too. In the whole history of Sun, we have never known what demand is, what elasticities are, or what the right prices are for our equipment”

For me, the real highlight of this book is Chapter 4, which could easily have been titled “An Idiots Guide to Value-Based Pricing", so clear, concise and well-structured is the chapter (as is the rest of the book).

It doesn’t matter if you work for a company that’s small or large, selling goods or selling services, or operates in business or consumer markets, there is something in this book for you. This is also, in my opinion, the first book that caters to the needs of the start-up / entrepreneur community, which makes it THE pricing book for the 21^st Century.

With this in mind, it should come to the surprise of readers that Stiving blogs at the appropriately-named www.PragmaticPricing.com.

A Christmas present for one lucky Pricing Propheteer

We've got one limited edition, collectors item, PricingProphets.com basball cap to give away to the next person who starts and pays for a pricing research project.

There has only been four of these caps ever made and this is the last one. Grab it now.

Click here to get serious about your pricing and start your Pricing Research Project...

The Golden Rules of Pricing

In 2008, I recorded parts of a Strategic Pricing Workshop I did in Bangkok, Thailand. I thought I'd give it a new lease of life and upload it...

PricingProphets featured in Public Accountant Magazine

PricingProphets.com is featured in the cover story on the October / November 2011 edition of Public Accountant. The magazine is not available online, but there is a copy available from the Press Room of PricingProphets.com

Here's why people write ratings and reviews...

Here's a price (and a product) you don't see anymore...

Pricing and Self-fulfilling Prophecies

Today's B&T Newsletter runs with the lead story that new research has found that...

"Price is the key factor in Australians' decision to purchase groceries, with eight in ten grocery buyers identifying price as more or just as important as country of origin when purchasing food"


REALLY? And why is that? Clearly, it's a self-fulfilling prophecy which did not require research to prove. If one supermarket spends the last 12-18 months on TV singing "down down, prices are down", what else would matter, besides price.

Here's a spoof of that "down down" ad...



Spoof's of "thats my woolies" aslo worth checking out on YourTube

How about a caption competition...

Looking for short and sharp captions for this photo...

Due to public demand...

Want to know the impact on Netflix's price change...

PricingProphets.com in The Australian Financial Review

"Well-priced advice for SME's" by Mark Fenton-Jones, which is almost entirely about PricingProphets.com, is the lead story in the Enterprise section of todays (23rd August 2011) Australian Financial Review. The article is behind the paywall, but you can read it here...

InfoGraphic: The Australian Advertising Landscape

I love a good InfoGraphic. Here's one I've put together on the Australian Advertising landscape, or where companies can sell and promote their products.

Have I missed anything? Suggestions on a postcard to jon (at) pricingprophets.com

If you know a campaign like this is going to be wildly successful, put your prices up first

Great Pricing Video

Great Marketing Video

For everyone else, there's PricingProphets.com

Accenture recently published a paper called “Going for Growth: The Role of Price and Cost in Driving High Performance in a Volatile Global Economy”

If you haven’t got time to read it, here are the key pricing-related points…

• Price optimisation was one of the three most important strategic priorities in the past 18 months for seven out of 10 companies;

• An equal percentage of companies did not have what Accenture would consider to be “sophisticated pricing capabilities”;

• Challenges in optimising pricing include sales execution, inadequate pricing analytics, unclear pricing strategy, inadequate decision support/analytics and governance and accountability incentives;

• Service, innovation and pricing are the most common levers for driving competitive advantage;
• Companies need to excel at delivering meaningful innovation at acceptable cost, and at a price that customers will ultimately pay;

• Companies most frequently use actions by competitors and the balance between supply and demand as inputs in setting price, and;

• Three-quarters of companies do not have a pricing strategy for difference marketing situations, nor is their pricing strategy tightly aligned with their overall business strategy.

The research surveyed 1,000 executives in 12 countries and 8 industries, all of whom have annual revenues over $100mill (ie, 'the top end of town').

And for everyone else, there’s http://www.pricingprophets.com/

Interesting Video on Menu Pricing

The Netflix Relief Fund - Enjoy!

Funny or Die Featured Videos from Funny or Die

Aug & Sep Speaking Engagements

I'll be doing a few speaking engagements in the next couple of months. You will be able to hear me...

1. On the September Business Essentials CD-ROM which I'll be recording in early August

2. At the Sales & Marketing Institute in Melbourne on the 16th August (Click here for details), and

3. In Shanghai for one or two value-based pricing workshops from 19th Septmber. Email for more details on this

Jon Manning
PricingProphets.com | Sans-Prix.com

Profit from Pricing & Music

There's some interesting little sound-bytes on the power of music over on Business Insider at the moment. Here's a couple of bits and pieces they authors have missed...

• A 2001 study by the University of Leicester Psychology Dept found that customers would pay more than GBP2.00 for a pint of beer when music was part of the ambience. The average response was GBP3.27 for a pint.
• An 8 week restaurant study found that customers spent 11 mins more at a table when slow beat music was played (compared to fast beat music), resulting in their beverage spend increasing by 41%, and total gross margins increasing by 15%
• But…staff in a data input centre processed 12.5% more vouchers when listening to fast music (compared to no music) and 22.3% more vouchers when compared to slow music

Could you get away with a 74% increased in prices?

This guy can. Full story can be found here

ShoeStringLaunch on PricingProphets

Click on the logo to read what ShoeStringLaunch.com had to say about www.pricingprophets.com

AnthillOnline on PricingProphets

Click on the logo to see what Anthill Online had to say about www.pricingprophets.com, in a story it ran on the 30th June 2011

How to segment children in China?

...by height of course, not age!

One of the worst graphs I have ever seen

This had the potential to be a great story on customers NOT buying on price. Unfortunately, I lost all interest in the story when I saw what is perhaps the worst graph I have ever seen.

The text around the image is proof I haven't cropped the image. Full article can be found here.

I assume this has something to do with the publisher, rather than the researcher?

Can anyone tell me what "naked pricing" is?

Here's Euro area price harmonisation in action...

Want to know what we've been up to lately? Building the world's first "crowd-sourcing" pricing website", which is now up and running. Providing the most affordable expert pricing advice in the world, you can find the website here.

Here's an article I wrote many years ago...

Found at ebookbrowse.com

Zimbabwe...again

Here's a follow-up to my posting on 28th April 2009 on inflation in Zimbabwe, taken in the British Museum last month

Who will notice your price change?

Think no one is going to notice your sneaky start-of-the-year price increase? Think again! Look at how much trouble The Guardian (1st Jan 2011, p11) went to to show readers the extent of train fare increases effective from the 2nd Jan 2011.

A Nice Cartoon...

On Apps Pricing...

This article deserves the widest readership possible!

How did Tata come up with $2,500 for the Nano?

The Tata Nano, a two-cylinder minicar that weighs 1,300 pounds and emits 103 grams of carbon dioxide per kilometer, less than any other car, got its price tag when Tata Group leader Ratan Tata made an offhand comment to journalists that the company could make such a car for $2,500. Newspapers picked up the figure, and the company used it as a challenge to motivate employees, Tata executive Sunil Sinha said in a lecture at Harvard University.

Source: Harvard Business Review, The Daily Stat, 21st October 2010

The FairPay Zone: Business Model Generation with a new spin: FairPa...

The FairPay Zone: Business Model Generation with a new spin: FairPa...: "The radically new FairPay pricing process is particularly relevant to the continuing dialog suggested by 'Business Model Generation,' the re..."

My first Podcast

My first podcast has now been embedded on the right - - >

Recorded with Michelle Nichols, then the Business Week Savvy Selling columnist, and published on the 26th April 2007

More developements at Ryanair

Passengers will also have to take their baggage from the airport to the aircraft, eliminating baggage handlers and making tickets even cheaper. What happens on arrival?

More here

Ryanair Shock

Ryanair boss Michael O'Leary last night confirmed that the low-cost airline was planning to make passengers fly the plane themselves.

"By sacking all of our pilots and allowing our passengers to fly the planes themselves, we'll be able to make considerables savings that will result in even lower ticket prices"

- Private Eye No 1238, 12th - 25th June 2009, p22

A Distraction - What would happen if Ikea purchased General Motors?

Meanwhile, back in Zimbabwe

New pricing model for an old industry

There's an interesting debate happening over at Wired on whether a new pricing model will work in an old industry....

Life Imitates Art

It wasn't that long ago that the story below, of a car dealer offering a "BOGOF" (Buy-One-Get-One-Free) on Porsche's got widely circulated.

Now its become reality (see above), and proof of how dire the US economy and car industry is, with a Dodge dealer in Florida offering two Rams for the price of one.

Fuel Surcharges

Here's an interesting development....

Singapore Airlines this week announced a reduction in their fuel surcharges.

It will be interesting to see if other airlines follow.

New Uses for Old Planes

Over the past 10 months, many people have commented on this posting on New Uses for Old Planes.

Well now another use has popped up, this time in Stockholm.

What can I say?

Prices (and inflation) in Zimbabwe

Its been a while since my last post on prices and inflation in Zimbabwe. In February last year, inflation was hovering at around 1,394%.

Inflation is now at around 2.2mill per cent, according to this article from France 24 and this article from The Economist.

Aircraft Toilets

In April 2007, I was interviewed by Michelle Nichols for a Business Week Savvy Selling Podcast. You can download the podcast here if you're interested.

In that interview, I talked about how low cost airlines had unbundled all the components of a flight ticket, and instead of charging one all-inclusive price, they had taken to charging for everything they could (meals, inflight entertainment, baggage, etc...collectively known these days as 'ancilliary revenues').

I also hypothesised about how long it would be before the airlines started to charge customers to use the aircraft toilet.

It now seems that others are starting to ask the same question. Sarah Maxwell's book, "The Price is Wrong", contains a forward by Jon Luther, who is the Chairman and CEO of Bunkin' Brands Inc. In his forward, he asks the very same question.

Even though my original hypothesis suggested the airlines were unsure whether to charge by weight or time, I still believe it is not beyond the realms of possibility that this may happen at some point. I was recently told that it costs about $1,000 to flush an aircraft toilet. I'm not sure how true this is, but what is clear is that aircraft toilets are very high tech.