On Pricing Theory

Recommended reading for pricing theory today and how it communicates value (yes this relates to PR) is Seth Godin’s Post "On Pricing".  That post stems from Joel on Software’s post "Price as Signal".  In particular Seth’s close of

Which leads us to the wisdom of Jeff Bezos. There are two kinds of companies, Jeff says. Companies that work to lower prices (like Amazon, most of the time) and companies that work to raise prices (like the music industry, all of the time).

Having attended the O’Reilly Emerging Technology Conference, the only fortune 500 CEO that will be sitting next to you through the sessions is Jeff Bezos.  Not flying in to talk and leave, but attending.  Studying.  Working to lower prices.  Overall not a bad thing, and speaking as a guy with a book problem, I appreciate Amazon.

I like studying pricing theory, well not really, it just became a necessity when running a company so there it is.  The one that makes the most sense to me is the Value Equivalency Line concept.  Crossing this with Geoffrey Moore’s concept of technology company marketing crossing the chasm creates an interesting set of thoughts.  And a pricing model that does work, although it may be based on luck.  So much of business is actually based on luck, we just don’t like to admit it.