Episode #492: The 'Third Rail' of Pricing — More on Price Discrimination

Business Podcast Archive and Shows - The Soul of Enterprise

NEW SHOW FEATURE: If you want to ask Ron or Ed a question and be featured on the show, please submit a voice recording from any device at https://thesoulofenterprise.com/questions

SHOW SUMMARY: Join Ron and Ed for an enlightening episode where we draw pivotal lessons from the extraordinary planning and execution of D-Day, as detailed in the National Review article, "D-Day at 80: How the Allies Won at Normandy and Changed History." Discover how meticulous preparation, clear communication, adaptive strategies, and resilient leadership led to one of history's most significant military successes. We'll translate these historical strategies into actionable project management tips for today's knowledge workers, helping you navigate complex projects and achieve your goals with precision and determination.

Use these show notes to follow along with the audio:

Segment one

• One of our “golden oldies” shows is all about pricing. Episode number 196: Top Ten Pricing Lessons https://www.thesoulofenterprise.com/tsoe/topten

• What is first-degree price discrimination? Also known as perfect price discrimination, first-degree price discrimination involves charging consumers the maximum price that they are willing to pay for a good or service. https://corporatefinanceinstitute.com/resources/management/price-discrimination/

• Ed brought up this definition of price today. As George Mason University economist Alex Tabarrok succinctly puts it, “A price is a signal wrapped up in an incentive.” https://www.discoursemagazine.com/p/prices-are-not-the-problem

• From today’s show: Prices contain three primary functions: They transmit information. They create an incentive to allocate resources to the most valuable use. They distribute income. (The last one is often forgotten)

• What is the technical definition of price discrimination? Price discrimination is different prices for different customers based on their willingness to pay. It doesn't have anything to do with costs.

Segment two

• Have you heard about Reframe 2024 yet? Hector Garcia — long time friend of the show — is at it again helping accountants with better communications skills and influencing conversations with their customers. Use coupon code TSOE for a preferred price https://www.reframe2024.com/

• The first full week in August will be a co-branded event with Reframe and MetaConsulting Academy. You haven’t hear of MetaConsulting Academy yet? Ed launched it TWO days ago! https://www.metaconsultingacademy.com/

• Why is Ron upset with Uber? “I think they fail — big time — with price transparency.”

• Regarding first-degree price discrimination, one of the limiting factors is being too hyper with this. If people don't believe the price is fair they're going to seek out alternatives.

Segment three

• Ron: “So let me tell you my Uber story…” He received a quote from Uber for $116 but there was an additional booking fee of $20 on the receipt. On the return trip, he reserved a time and the booking fee was $26!!!

• Regarding Ron’s Uber experience: “It’s all about feelings and fairness but that's price transparency. This is why we've been railing against the billable hour for 40 years because it's not transparent in terms of your price.“

• Did you know that before John Wanamaker invented the price tag, most buying in the United States was done by haggling? More here: https://www.pbs.org/wgbh/theymadeamerica/whomade/wanamaker_hi.html

• As a construct, democracy is the worst way to make pricing decisions. The great thing about the pricing mechanism is you get to decide exactly if it's worth it to you or not.

Segment four

• A creative idea from Ron today: “Take your specific congressman in your district, and look at the ratio between what he votes for spending divided by what he votes to increase revenue for the government spending over revenue. Take that ratio and you multiply it by your total tax on your 1040.” Genius!

• If you understand price discrimination that's how it was done by cosmetic companies. They have the same makeup sitting in Nordstrom and CVS, but they charge radically different prices for it, because those are different segments of the market.

• Ron Baker on the show today: “When I shop for flights, it's not so much timing. I shop by plane…and they charge higher prices for the Dreamliner.”

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits.