Pricing Strategy vs. Pricing Tactics

Many pricing books are heavy in ideas, abstractions, and behavioral science mind-shifting. Others are focused on simple pricing tactics. Jean-Manual Izaret’s (JMI) book, Game Changer, fills a void by showing readers and pricing practitioners how to approach pricing strategically through cleverly designed frameworks and thought-provoking questions. The heart of this conversation is The Strategic Pricing Hexagon and how to play the right pricing game.

Interview Highlights

Mark’s dry-erase board suggestion
The reason Hermann Simon enthusiasts will enjoy Game Changer
The reason why math is not a prerequisite
Ford’s greatest strategy is not what we think it is
The caterer’s cupcake dilemma
The starting point – cost, competition, and value
JMI’s strategy layers and Mark’s overhead projector analogy
Elasticity, game theory, and differentiation
A simple deep dive into cross-elastities
How to know which game to play in (Mark appreciates the ‘games’ grid)
A simple explanation of one of the seven games – the uniform game
A simple strategy for reading this book
An explanation of pricing governance
The Brad Smith story is instructive and sticky
JMI’s Ted Talk
The books that have shaped JMI’s thinking over each decade

We define a pricing strategy as a business leader’s conscious decisions on how to shape their market by determining the amount of money available, how that money flows, and to whom. It reflects the company’s philosophy on how to acquire, retain, and satisfy customers by sharing value with them fairly.

A company’s entire revenue is the outcome of its pricing decisions. This makes pricing strategy indispensable.

Each game (of the seven) has a unique set of rules and dynamics that companies should understand to develop successful long‐term strategies.
Izaret, Jean-Manuel; Sinha, Arnab. Game Changer: How Strategic Pricing Shapes Businesses, Markets, and Society

Books Mentioned on the Show

An Eternal Golden Braid by Hofstadter
Guns, Germs, and Steel: The Fates of Human Societies by Diamond
Linked: How Everything Is Connected to Everything Else and What It Means for Business, Science, and Everyday Life by Barabasi
Superintelligence: Paths, Dangers, Strategies by Bostrom
The Singularity Is Near: When Humans Transcend Biology by Kurzweil
The Chaos Machine: The Inside Story of How Social Media Rewired Our Minds and Our World by Fisher

Jean-Manuel Izaret’s Ted Talk

Before I started JMI’s book, I found his Ted Talk, and it’s outstanding. I was curious if he would bring it up in the book. You must wait a while if you read the book from cover to cover, but he ultimately does so.