Pricing with Confidence: 10 Ways to Stop Leaving Money on the Table (Hardcover)

~ Reed Holden (Author), Mark Burton (Author)
Key Phrases: little arrogance, pricing with confidence, discounting habit, Parker Hannifin, Harvard Business Review, Red Hat (more...)

Editorial Reviews

Product Description

Bad pricing is a great way to destroy your company’s value, revenue, and profits. With ten simple rules, this book shows you how to deliver both healthy profit margins and robust revenue growth while kicking the dreaded discounting habit. The authors destroy the conventional wisdom that you have to trade margins for revenues and show you how to fully exploit the value your company offers customers. This is a proven plan for increasing sales without sacrificing profits.

From the Inside Flap

Face facts: Customers have never met a price they liked. And they will use every trick in the book to get you to lower your prices and give up profits. The typical business response is to discount, discount, discount—resulting in less revenue and lower profits.

In Pricing with Confidence, pricing gurus Reed Holden and Mark Burton offer a radically different solution—one that actually builds revenues and profits without lowering prices. The key? Linking prices to the value delivered. The real trick is to bring people from marketing, product development, sales, and senior management into the process of discovering and defending the value you create for customers.

Holden and Burton show you how you can get everyone in your firm to feel 100% confident in your pricing—no matter what customers are saying or how fierce the competition. By following the ten simple rules outlined in Pricing with Confidence, you will be able to hold steady or even raise prices while your customers experience increased value for every dollar they spend. The result is increased revenues and profits.

Pricing with Confidence is a road map for senior leadership in sales, marketing, finance, and pricing to work together to outperform the competition. Pricing with Confidence is organized into ten simple and practical rules to help senior leaders tackle rampant price discounting, negotiate with poker-faced customers, and protect the value a company works so hard to create.

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Product Details

• Hardcover: 240 pages
• Publisher: Wiley (February 25, 2008)
• Language: English
• ISBN-10: 0470197579
• ISBN-13: 978-0470197578
• Product Dimensions: 9.1 x 6.2 x 1 inches
• Shipping Weight: 14.4 ounces (View shipping rates and policies)
• Average Customer Review: 4.8 out of 5 stars  See all reviews (12 customer reviews)
• Amazon.com Sales Rank: #12,818 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

12 of 14 people found the following review helpful:

5.0 out of 5 stars Priceless Wisdom From Reed Holden and Mark Burton, February 19, 2008

By	Ron Baker "[e-mail]" (California, USA) - See all my reviews (REAL NAME)

The American writer Alfred Kazin remarked that "One writes to make a home for oneself, on paper, in time and in other's minds."

Well, Reed Holden certainly has had a place in my mind since I first read him back in October 1998. His book, co-authored with Thomas T. Nagle, The Strategy and Tactics of Pricing (STP) is a seminal work, adorning the bookshelves of anyone who takes pricing seriously. With this influential book, Holden and Nagle are probably more responsible than any other individuals for putting pricing on the organizational charts of companies around the world.

I was fortunate enough to receive an advance copy of Reed Holden and Mark Burton's new book, Pricing With Confidence, spending a couple of days after the New Year absorbing its many lessons. Of course, there is no possible way to do justice to this work in such a short space, so instead I will simply share with you some of the more brilliant insights that struck me like a thunderbolt.

In addition to a brief synopsis of the Ten Rules of Engagement, the Introduction starts out with a discussion of the pricing death spiral, a never-ending process whereby the buyer continuously gets the seller to offer more and deeper discounts. A process, the authors teach, with no winners, only survivors. The Ten Rules offered in the book are effective strategies to counter this trap--along with capturing more of the value a company creates.

The Introduction also contains a discussion on "What Is Your Pricing Purpose?" offering this advice: "In Reality, pricing is far from simple. Setting the optimum price is one of the most difficult decisions managers ever make."

Amen. This statement recognizes that pricing is not a science, it is an art; but it's also a skill, meaning the more we do it, the better we get. The authors also suggest that the highest purpose of pricing is to increase profits.

The summary of Rule Two proffers this sage advice: "You can't have confidence in your pricing until you have confidence in the financial value that your offerings create for customers. Even though many managers are convinced they can't get this information, the reality is that most of your customers are eager to tell you. All it takes is asking the right questions and being willing to listen."

Yet how many firms truly understand this? It's much easier to sit around and lament the fact that what they sell is increasingly a "commodity," complaining about the procurement process, and whining that customers simply don't understand the value they create. But that's the cowardly way out, shifting blame and responsibility onto others.

If companies themselves don't take responsibility for comprehending, communicating, creating, convincing and capturing value, who will? How can you change something if you don't accept responsibility for the underlying causes?

The discount habit--what they label discount creep--is usually the result of either selling to customers who don't value what is offered, or a wrong customer to begin with--as they write, "the price isn't wrong; the customer is."

Rule Four identifies four types of customers: price buyers, value buyers, relationship buyers, and a group they call poker-playing buyers. The chapter goes on to discuss strategies--honed by real-world experience--on how to deal with each type that are worth the price of admission.

Lest anyone accuse me of writing a hagiographic review, I don't agree with everything in this book, a source of endless exchanges of emails between Reed and myself.

My biggest disagreement is with Rule Nine: "Take Simple Steps to Move From Cost-Plus to Value-Based Pricing." It's not that I disagree with the necessity of an incremental approach--since the cultural change required for any company to move to real Value Pricing is massive--it by necessity must be incremental.

My issue is with this statement: "There is nothing wrong with cost-plus pricing as long as it does a good job of leveraging the financial value you create for customers." Yet, it's highly unlikely that cost-plus pricing does this, except by coincidence.

My worry with this statement is that some leaders will use it as an excuse to delay, or put off entirely, making the transition to VP. Replacing cost-plus theory with value-based theory is hard enough without some people clinging to any last vestige of the proprietary of the old model, especially from someone as prominent as Reed Holden.

But then they write: "An important point about cost-plus pricing is that most organizations are comfortable with it," all I can say is a lot of people are comfortable being fat, but that doesn't make it optimal. I also reject their notion that "If an organization sharpens the quality of its costing data, it is always in a superior position." And "Applying incremental costing produces what we call value-enhanced cost-plus pricing." Huh? That's a enhanced contradiction in terms--like jumbo shrimp.

But becoming more accurate cost accountants isn't going to make a company become better pricers. Toyota doesn't even use a standard cost accounting system, but rather a process they call target costing.

These technical disagreements aside, they take nothing away from this work--a fantastic book that should be read by anyone who considers themselves serious about creating and capturing value through better pricing. Reed and Mark have created another permanent home in my mind with this work.

10 of 12 people found the following review helpful:

5.0 out of 5 stars Practical steps that will improve pricing - Just do them, February 15, 2008

By	James Geisman "[e-mail]" (Boston, MA USA) - See all my reviews (REAL NAME)

Often books written by pricing consultants look at situations and tell the reader "what is possible". Many of these books should have a disclaimer saying "consultants not included" since many times the only way to get results is by hiring consultants.

While those books are rich on methodologies, analyses and frameworks, they are poor on answering the question "So what should I do first thing tomorrow?" That is where Pricing With Confidence comes in.

Reed Holden, one of the pricing community's thought leaders has authored a new book along with Mark Burton, co-founder of Reed's new consulting organization, Holden Advisors. General Managers and people in pricing functions will find this book valuable for several reasons.

First, the authors offer, as they say, ten ways to stop leaving money on the table. Second, the suggestions are immediately actionable without consultants. Third, they will bolster your confidence that, with some intestinal fortitude, change is possible.

The book chapters are devoted to each of the ten ways to stop leaving money on the table. The writing is down-to-earth and easy to read (and, even more important, easy to understand). For those readers who may want to skim the book, they would be well advised to read the introduction that contains an excellent summary of the ten chapters.

This book deserves bookshelf space for people who want to find ways to improve their company's financial performance and are willing to make the necessary incremental changes. There is no silver bullet or magic in Pricing With Confidence. It is a straightforward book that proves, once again, that 80% of success is just showing up (and doing a few things right.)

4 of 4 people found the following review helpful:

5.0 out of 5 stars Setting an optimal price where company profits are maximized is one of the most difficult decisions to make when starting a biz., September 14, 2008

By	Jeff Lippincott "www.Jlippin.com" (Princeton, NJ USA) - See all my reviews (TOP 500 REVIEWER)    (REAL NAME)

I liked this book a lot. I thought it was well outlined and well written. The book's overall message is that the small business owner should link prices to the value delivered. The reader should be able to optimize pricing for her services or products after considering the 10 rules of pricing presented in this book:

1. Generally, don't let the customer talk you down in price
2. Price your service or product at a level that a customer is willing to pay if they understand the value of your service or product
3. Know which of three pricing strategies you are using and stick to it
4. It's OK to negotiate price with customers, but make sure you win
5. It's OK to lower prices, but only in order to increase profits
6. Expand your offerings so you aren't locked into one price for one product
7. Great pricing will often force your competition to react to your pricing
8. Your company's sales force has to be expert at why and how you priced your services or products
9. Set prices based on value - not on cost-plus
10. Always keep in mind you are in business to make a profit without leaving money on the table

I loved the instruction that the author provides regarding how an owner of a small business has to be willing (and able) to fire unprofitable clients and customers. Business people who compete on price are playing a fool's game. Smart business owners understand that value is the basis for business exchange and that to be successful at business one must FULLY understand value. This book puts forth a pretty good effort to help the reader fully understand value, or at least how to go about fully understanding value after doing a little investigation and research of the market.

Pricing goods and/or services is far from simple. And setting an optimal price is one of the most difficult decisions to make when starting a business. Furthermore, as a business grows and matures pricing at an optimal level continues to be difficult. Prices never stay the same because demand never stays the same. To do this well one must know the market (competitors & customers), know the costs, know the perceived value, and know the actual value.

Getting a handle on all this is not particularly easy. This is especially true because customers are often times very hard to figure out. Some are price buyers, some are value buyers, some are relationship buyers, and some are poker-playing buyers. Knowing these four types of buyers is a heads up for the small business person. But he or she still has to read the customer and figure out which one of these four the customer is before negotiations can be performed in favor of the seller. Read this book and start on your path of being a better pricer of your services or goods. 5 stars!