If you’re responsible for pricing strategy in a small company but don’t consider yourself a pricing specialist, you’ll certainly find Robert J. Dolan and Hermann Simon’s book ‘Power Pricing’ beneficial.
The book starts with an economic analysis of price, costs, and profits. From there it moves on to understanding how customers respond to prices. The book covers several methods of determining price sensitivity, including conjoint analysis, a technique used by sophisticated companies but rarely understood by those of us who are not technical experts. The book’s brief overview is also easy to grasp even if you have no prior background in the field.
The first part of the book ends with an interesting chapter on pricing and competitive strategy, and is full of examples which clearly illustrate pricing principles.
The second part of the book introduces specific pricing concepts and techniques, most of which may be familiar, but are nonetheless analysed to great depth.
The book will also challenge you. For instance in the chapter on product-line pricing, the book asks the reader: Are you willing to sacrifice profit on one item in order to make more profit on another How do you determine which products should be considered together when you set prices? How do you know how much a price change in one product affects the sales of another product?
These are some of the questions which are tackled in the book and will be useful to any business owner.