HBR notice how traditional pricing strategy is by definition antagonistic, but it needs to become a more socially conscious, collaborative exercise. Businesses should look beyond the dry mechanics of “running the numbers”—still relevant but no longer sufficient—and recognize that humanizing the way they generate revenue can open up opportunities to create additional value. That means viewing customers as partners in value creation—a collaboration that increases customers’ engagement and taps their insights about the value they seek and how firms could deliver it. The result is a bigger pie, which benefits firms and customers alike. The following tips can ensure you are pricing efficiently:
Focus on relationships, not on transactions
Put a premium on flexibility
Manage the markets standards for fairness
It is crucial to understand and be able to influence consumers’ perceptions of pricing fairness. When prices seem fair, consumers often buy more and are more willing to pay a premium. Conversely, when prices seem unfair, consumers may punish companies. Critically, perceptions of fairness relate not only to final prices but also to the process by which they are set.