Having recently read
Free: How Today's Smartest Businesses Profit by Giving Something for Nothing, I was looking for something a bit more in-depth. I didn't find it here. For a book written by two professors, and endorsed by four more on the back cover, I expected at least a couple of charts or graphs, plus some scholarly analysis. Unfortunately, what was delivered was a long magazine article with no analysis and few "facts," some of which are erroneous.
Some examples:
P. 132: "Tesco's (a leading British grocery store chain) Clubcard operation also used this data to send personalized coupons and other offers to every Clubcard household every quarter, a huge operation that accounts for more than 6% of the UK's annual postal volume." Using the 13 million household number found on page 131, this means that annual UK postal volume would be about 867 Million pieces. Unfortunately, according to Royal Mail Holdings, Royal Mail delivers more than 84 million pieces of mail PER DAY, meaning the quoted statistic is off by a factor of more than 35X. For the statistic to be true, Tesco would have to mail more than 5 Million pieces per day, or two pieces per member household per week, more than 100 pieces per member household per year. Other "facts" similarly lack the most rudimentary checks.
P. 102: "As good as the traditional pricing system works..." Back in 5th grade, they taught us that should be "As well as..." A nit, but expectations are high for a $34.99 book of under 210 pages. Actually, this chapter "The Automatic Markdown" is one of the better chapters in the book, discussing the history and application of the Filene's and Sym's system of lowering prices for women's fashions according to a fixed schedule announced in advance. But this chapter fails as the book fails: despite the interesting discussion, not one chart compares the pricing or profits of Filene's Basement with the rest of the Filene's chain, or with that of other retailers. Indeed, on page 109 the author states, "Even the Filene's Basement branches that opened outside Boston in the late 1970's untimately stopped using the store's unique pricing structure." Wow-a pricing system that became world famous at a single store location didn't work at other branches of the same chain? Why? The authors offer no analysis, not even suggesting possible reasons. Even an undergraduate paper on this topic would offer guesses.
According to the index, Apple Computer is mentioned on pages 90, 169 and 172. Apple's iTunes, iPod and iPhone offer multiple different case study opportunities for a book on pricing, and indeed a quick web search uncovers a number of useful and detailed analyses of Apple's pricing strategy. Unfortunately, the professors chose not to offer any analysis in this book, instead devoting just four lightweight paragraphs to the world's most highly valued technology company, and providing only a handful of well worn facts. When you can find better analysis on the web than in an allegedly scholarly book, you can be pretty sure the book has missed its mark.
Because the title mentions Google, you might expect some level of insight and analysis into Google's famous pricing models. Unfortunately not. According to the index, Google is covered on pages 41-44. Here are some telling excerpts from those pages: "...why does Google stick with this model? It's not because Sergey Brinn, one of the young co-founders, was born in the old Soviet Union and is nostalgic for communism. Nor because the company shares the utopian idea of some of the early Internet developers that information somehow deserves to be free." What follows is several hundred words about what Google headquarters building looks like, how Fortune rated Google the best company to work for in the United States in 2008, how employees receive free laundry service and haircuts, and Google's market valuation. There is even a quote, from a FICTIONAL CHARACTER (Gordon Gecko from the movie Wall Street). But not one word of actual analysis on Google's pricing models. This is just one example of the non-content that fills this book.
The closing words of this scarce information on Google are found on page 44: "...advertising displayed alongside a search for keywords 'marketing consultant' currently runs at $4.00 per click-through, while 'price consultant' is available at the bargain rate of $2.89." As usual, the authors got it wrong. The market determines the price of Google ads. This price difference is not indicative of a "bargain," but instead the voice of the market describing with great precision the relative value of ads targeting those search terms, on the day the comparison was made. Neither the authors (nor their editors at Wharton School Publishing!) seem to understand this distinction, making them singularly unqualified to write a book on pricing.
Recommendation: To satisfy your curiosity about pricing, read Chris Anderson's
Free instead. It makes no pretense to be scholarly or analytical, but delivers far more content at a substantially lower price. Then, read
Getting to Plan B: Breaking Through to a Better Business Model, a book full of clear analysis, recommendations and examples about how to get price and other aspects of your business plan right. The latter book, in particular, is a good example of what a 240-page business book should be: content rich, well vetted, solid analysis, lots of examples. In short, exactly what Smart Pricing fails to deliver.
