The full title of this book by Ron Baker is
“Pricing on Purpose: Creating and Capturing Value“.
in my review posted on Amazon.co.uk, I gave the book a rating of Four Stars. This means I think it is Good.
Here is my book review.
Has some excellent content for value pricing but it is long-winded.
The author is responsible for changing the thinking of many accounting and legal professionals on how they should be pricing their services. He advocates moving away from fees based on clocked hours and moving towards fees based on the value of the work done to the client. This book moves value-based pricing out of professional services and into the mainstream.
This book challenges the entire theory behind one of, and possibly the most important drivers of profit, how you choose to set price and then level of price you charge. Forget about cost plus pricing because that is a supply side concept which determines whether you should supply. If the possible price is above a correctly calculated cost plus a minimum profit, you are in the game, if not, you shouldn’t get involved.
How much a customer is willing to pay is a demand side concept and relates entirely to the value of the benefits your product brings less the constraints imposed by the prices charged by competitors and the value they provide.
The book starts slowly. The author has a great reputation but I fear that many copies of Pricing On Purpose are bought, started but never finished. Unfortunately that stops the reader getting to the good stuff which challenges the way you approach the entire issue of pricing in your business.
The good stuff for me starts with chapter 12 on page 129. Because I am interested in the issue of customer value and how that can be translated into a market position when you compare value with price, the next eight chapters are fascinating.
Chapter 12 – What and how people buy
Chapter 13 – The value proposition
Chapter 14 – The consumer surplus and price discrimination
Chapter 15 – Customer segmentation strategies
Chapter 16 – Price discrimination in practice
Chapter 17 – There is no such thing as a commodity
Chapter 18 – Baker’s Law: Bad customers drive out good customers
Chapter 19 – Ethics, fairness and pricing
The book loses me again at this point as Chapter 20 refers to Antitrust Law in America. The next chapter asks who is in charge of value and the final chapter is a summary of the book.
The early sections are long-winded but I don’t recommend that you skip them as they set the scene for the important value based pricing ideas that follow.
The concept of pricing based on value delivered is an important one to understand. You can do exactly the same work for two customers but one can get much more out of it than the other and will be willing to pay more.
There are many thousand of business books, you can see the full list of my reviews at Business Books Reviews by Paul Simister. I’ve also narrowed these down to a list of the 12 Best Business Books For Business Owners & Entrepreneurs.