Wednesday, February 23, 2011

Where does pricing power come from?

Warren Buffet was quoted recently as saying:

The single most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business... The extraordinary business does not require good management.

So what is pricing power? The ability to raise prices without loosing business.

Where does it come from? Pricing power derives from many sources. Bloomberg cited Buffet's holdings in railroads and utilities, which derive pricing power from their dominant market position. Buffet also has stakes in consumer companies like Coca-Cola Co. and Kraft with powerful brand appeal that attracts and retains customers. Businesses that serve value oriented customers who demand more than brand appeal and those without high barriers to entry rely on innovation, quality, extraordinary customer service, operational excellence, and value to achieve pricing power.

Bottom line: Pricing power is an indicator of a good business, but isn't the cause which makes a business great. History is replete with stories of titans laid low by disruptive upstarts, so I wouldn't discount the need for good management even in extraordinary businesses.

Monday, February 21, 2011

How NOT to label products

I hate it when I buy something, take it home, and find I have to struggle with irremovable product labels. Note to Boise Cascade, Home Depot, and anyone else who is listening... If you are going to sell AB Plywood, put the #%&@! label on the B side, not the A side.

I'm paying extra to get a clean finish for my project. Do you think that means I want to spend 15 to 20 minutes scraping off your UPC that seems permanently glued near the middle of the sheet of plywood?

You would hope they would know better!
Now I feel better.

Sunday, February 20, 2011

Diane Rheme interviews Eduardo Porter, author of "The Price of Everything" listen

Diane Rheme interview with Eduardo Porter, member of The New York Times's editorial board, and author of "The Price of Everything" Podcast - I bought the book becasue of my interest in pricing, but it's much more about value and values. [~ 50 minutes of great listening]

Saturday, February 12, 2011

Advice on Freemium Software Pricing

Andy Singleton, founder and CEO of Assembla a SaaS provider gives an in-depth summary of experience with software pricing terms.

Secrets Of Freemium Pricing: Make The Cheapskates Pay

The post provides practical priorities for pricing, and many other pricing nuggets.
The number one goal: Maximize Revenue
The number two goal: Reduce Cost of Sales

Thursday, February 3, 2011

Recovering from information overload: McKinsey Quarterly

Always-on, multitasking work environments are killing productivity, dampening creativity, and making us unhappy.
JANUARY 2011 • Derek Dean and Caroline Webb

My favorite quote from the article:
"Multitasking is not heroic; it’s counterproductive."

Tuesday, February 1, 2011

Ann Deavere on hope & determination (heard on NPR)

Philosopher Cornell West, according to Ann Deavere: Hope and optimism are different. Optimism, you look out the window, you say it looks pretty good out there. Hope says it doesn't look good at all. It doesn't look good at all. Evidence doesn't look good at all, but I'm going to go beyond the evidence, and create new possibilities based on vision, become contagious to allow people to engage in heroic actions always against odds, no guarantee whatsoever, that's hope.

Ann Deavere on rodeo bull rider Brent Williams" Think about it, we shouldn't be able to stay on top of bulls trying to buck you off cause we weigh like a hundred fifty pounds bull weighs over 2,000 pounds. but I think what keeps you on top of that bull is determination, something in side you.

Toughness is when you meet that thing that is going to defeat you, how do you ride that bull? The thing that keeps you going is this understanding that we are small, that we weigh a hundred fifty pounds, but the bull... What keeps you going is determination. And the determination is hooked into a belief that if you keep going, if you struggle, something really beautiful is going to happen.