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Game Changer

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Game Changer

How Strategic Pricing Shapes Businesses, Markets, and Society

Wiley,

15 min read
9 take-aways
Audio & text

What's inside?

Learn how a strategic approach to pricing can transform businesses, markets and even societies.

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Editorial Rating

7

Qualities

  • Innovative
  • Applicable
  • Concrete Examples

Recommendation

Pricing is more than a numbers game: Pricing models shape businesses and markets, and have ripple effects across societies. Boston Consulting Group partners Jean-Manuel Izaret and Arnab Sinha make the case for approaching pricing strategically, looking beyond value extraction and zero-sum assumptions. Viewing pricing as an opportunity to share value with customers, the authors describe seven pricing models – or “games” – defining how that value gets shared and, in turn, how companies acquire and retain customers. The book includes interesting accounts of how major players like Tesla and Amazon have shaped their industries by adopting innovative pricing models.

Summary

By adopting a strategic approach to pricing, business leaders can drive growth and performance.

Many people view pricing as a dry, mathematical exercise in which a company seeks simply to extract the maximum value from transactions. The underlying assumptions of this view include that business transactions are zero-sum – that is, what one party gains, the other loses – and that drivers such as demand, willingness to pay and competition represent givens that don’t change. But this view of pricing has serious flaws. It doesn’t recognize the reality that the inputs to price move dynamically, and that sellers can approach pricing as an opportunity to collaborate with buyers, share value and foster loyalty.

Sellers that take a different approach to pricing can escape the constraints of zero-sum and transform their businesses and entire markets. For example, in the early 1900s Henry Ford reshaped the automobile industry – and dominated global production – by dispensing with the practice of charging what the market would bear and instead innovating ways to reduce prices.

The three classic pricing methods – based on cost, the competition or value – force businesses...

About the Authors

Jean-Manuel Izaret is a senior partner and global leader of the marketing, sales and pricing practice at the Boston Consulting Group (BCG). Previously, he led BCG’s pricing practice for more than a decade. Arnab Sinha is a senior partner and managing director at BCG, leading the pricing practice in the consumer space and in North America.

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    J. H. 11 months ago
    The authors should have shared examples of companies and industries the use each of these pricing strategies they explained. While I understood most of the strategies I had a hard time recognizing where and to what extent these were applied.
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      10 months ago
      Well said