Kevin Harrington // marketing // blog

Cost plus pricing is on of the biggest evils within businesses. It appears the safe approach but fails to maximise opportunity. Also, taking this approach, sale prices tend to erode to the level of cost prices. This is unacceptable for most businesses.

There are in fact many different solutions to determining a price. Some of the ideas are: temporal/time based pricing; multidimensional pricing; risk based pricing; variable pricing. A chart showing these is available for download.

One of the concepts on the chart is the diamond-water paradox:

The diamond-water paradox is the apparent contradiction, or paradox, that although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market.

Can you suggest any more approached to pricing that I can add to the chart?

High School Musical storage box

Genius! The packaging is the POS and the product. And then you have to make it yourself.

The medium High School Musical storage box when assembled is 290mm wide, 385mm deep and 190mm high. But of course you make it yourself from a flat-packed simple kit where the lid is the product box.

As with most character/film merchandise a healthy premium price is charged as well.

Let’s hope they don’t move into house sales!

There is a fine debate on price, value and consumer choice on the BBC Magazine.

“There is a tendency in this information age to compare prices, and say whichever company will sell me this product at the cheapest price, must be the one that I should purchase.”

Click here for more.

Petrol was down to 99.9p per litre in Reading, Berkshire today. Fabulous. Just two days ago it was 105.9p. It cost me £3 less to fill the tank.

We are all happy enough to moan at the speed prices increase. So I’m giving praise to BP for the rapid deflation.

p.s. the petrol station mentioned is the BP Connect one at the Three Tuns crossroads, Wokingham Road, Reading, Berkshire.

Petrol price surveys

I  was waiting in a line to pay for some petrol at my local BP garage. The delay was caused by the usual number of people buying sausage rolls, milk, cat food and occasionally petrol.

The phone rang and a member of the staff answered the phone. The caller, presumably a competitor or their agent, asked the price of unleaded petrol and diesel per litre.

The BP cashier looked out of the window at the gantry sign with the price indicators and answered the caller by adding 1p per litre to the price.

Does this go on all the time? Is this kind of lying ethical? Whose interests are served by these tactics? Should a retailer allow themselves to be observed employing these tactics?

I personally feel that it is bad for the retailers brand image and it is unethical. It also serves to hold prices higher. This is unless everyone knows the tactics and it is all a daft game.

And what if the caller were a consumer or a price comparison website? This would then result in less business for the retailer that makes their prices appear higher than they actually are.

All very odd. Any thoughts on this?

I recently changed cars. More accurately: last month I changed car for the fourth time in 2 years. Each time this necessitated the usual faff of sorting the insurance.

I tried the online comparison sites, you know confused.com and the like. What a load of hassle. The best price was finally achieved by talking to a human being at A-Plan Insurance.

After this experience I also discovered that some major insurers don’t have their product listed on these price comparison sites. So are their adverts misleading?

Marketing Week have just published a fine article on this subject as well. See http://www.marketingweek.co.uk/item/56628

Warehouse

In these heady days of YouTube, MySpace, Google, eBay et al, it can be easy to forget that some people still run businesses that sell physical things.

This blog gives a very practical view on stock and cash. There is a good comment on there as well. See Positive Churn: Cash Belongs in the Bank, Not in the Warehouse

A full warehouse with excessive stock versus sales rates makes businesses chase the wrong type of business. You end up paying to have the stock in the warehouse or reducing margins to move it.