Confessions of the Pricing Man: How Price Affects Everything

by Hermann Simon

The most important aspect of price is and will be value to customer. “Good pricing has three prerequisites: create value, quantify value, and communicate value,” I said in summary. “That is when you get the price you deserve, the price you need for a profitable business. And, last but not least, avoid price war s.”

The short-term orientation—in particular the typical quarterly fixation of publicly traded companies—is one of the most controversial aspects of capitalism.

Management should focus on long-term profit maximization

This risk aversion and the perceived lack of control over the outcome make price actions a less palatable option than cost-cutting and volume growth.