The Relationship Between Pricing and Customer Behavior

Robert Edwards specializes in delivering consulting and training for company executives to understand how to optimally price their products and services, monetize their products, maximize value generation and extraction from their product portfolio, and develop their promotions and competitive strategy to increase profit. He holds a PhD in Pricing and Competitive Strategy.

In this episode, Robert shares how to simplify your pricing and effectively communicate its benefits and what value it generates.

What you will learn from this episode:

• Understand how to use price to generate value for your product or services
• Learn to use pricing to attract the customers you want
• Find out about the connection between behavioral economics and pricing

"Creating value for your pricing could be an extra dimension to what we talk about regularly when we're thinking about designing our products and pricing those products."

- Robert Edwards

Topics Covered:

01:25 - How he found his route into pricing

03:15 - Discussing the idea about complicated and simple pricing

04:55 - How Ryanair creates a perception of simple pricing

05:55 - Why make your pricing simple

07:04 - Robert's important thoughts on creating value for your pricing

08:48 - How to add value through pricing

10:42 - LinkedIn as an example in the way of creating value and not just extracting value

14:34 - Thinking in terms of the buyer composition and not just the number of units bought

16:35 - Examples that uses price to attract the customers you want

19:50 - An example that uses pricing as an attention grabber to make all else reasonable

21:09 - A case of sellers focusing on different dimensions in attracting customers and not just pricing

22:57 - How pricing and behavioral economics tie into each other

25:36 - Considering behavioral economics at the beginning rather than at the end of the pricing process

26:18 - Understanding the pricing strategy around rebates

27:01 - Using value-based pricing and having the clarity of message why you're pricing in such a way

Key Takeaways:

"I would definitely recommend in a lot of cases simplifying your prices adds value to the products and service that you're offering because consumers have a really strong preference for this as well." - Robert Edwards

"Behavioral economics is increasingly at the heart of real pricing strategies because you can design a pricing strategy with rational consumers in mind, and it completely does not work the way you intended because consumers have these biases and they're susceptible to framing effects." - Robert Edwards

"A lot of the companies that I speak to, there's an opportunity to add value to their product by using a different pricing metric. And the only reason that pricing metric is really valuable is because of the behavioral biases of the consumers." - Robert Edwards

People / Resources Mentioned:

• Ryanair: https://www.ryanair.com/gb/en
• LinkedIn: https://www.linkedin.com/
• Subway:https://www.subway.com/en-us

Connect with Robert Edwards:

• LinkedIn: https://www.linkedin.com/in/edwardsra/

Connect with Mark Stiving:

• Email: mark@impactpricing.com
• LinkedIn: https://www.linkedin.com/in/stiving/