http://blog.sentrana.com/2009/05/27/you-are-not-at-the-mercy-of-the-market-you-have-all-the-power-to-make-your-price/ Turning complexity into competitive advantage Mon, 21 Jun 2010 20:35:03 -0400 http://wordpress.org/?v=2.9.2 hourly 1 http://blog.sentrana.com/2009/05/27/you-are-not-at-the-mercy-of-the-market-you-have-all-the-power-to-make-your-price/comment-page-1/#comment-127 Sentrana Blog » Blog Archive » Finding Pricing Excellence on a Roulette Wheel Thu, 11 Jun 2009 21:44:34 +0000 http://blog.sentrana.com/?p=196#comment-127 [...] of my recent posts, “You Are Not At the Mercy of the Market…”, attracted a rather thought-provoking response posted directly to the blog.  The crux of this [...] [...] of my recent posts, “You Are Not At the Mercy of the Market…”, attracted a rather thought-provoking response posted directly to the blog.  The crux of this [...]

]]> http://blog.sentrana.com/2009/05/27/you-are-not-at-the-mercy-of-the-market-you-have-all-the-power-to-make-your-price/comment-page-1/#comment-125 Staufer Thu, 28 May 2009 03:49:18 +0000 http://blog.sentrana.com/?p=196#comment-125 Interesting post, Syeed. However, you say: "you can digest all of your data to pinpoint the optimal price you can charge in the market". After looking at all the factors you outlined, this statement sound phoney. With so many factors at play, words like "pinpoint" and "optimal" should not be uttered. They suggest a degree of certainty that is humanely impossible. Don't peddle certainty in a fundamentally uncertain world. Moreover, you fail to look at one important issue: How much would an ordinary musician make during rush hour on a random day? Maybe he would make significantly less than $32. If that is the case, product quality does matter hugely. Note also that $32 for a 43 min performance implies an hourly wage of $44.65, which is not bad at all. Many good, non-celebrity musicians would be glad if they made that kind of money. He earns more in his "real" life, but that is because of the self-reinforcing loop of celebrity status. The difference between his earnings and that of good non-celebrity violinists is probably much higher than the difference in their craft. In other words, the price he commands in real life owes much to chance, not just to skill, skill being a necessary, but not sufficient, condition for superstardom. To talk of pinpointing optimal prices in such chance-dependent circumstances is meaningless. It only makes sense in the restricted conditions of the subway station. But since that is a constructed situation, it does not lend itself well to generalisations. Interesting post, Syeed. However, you say: “you can digest all of your data to pinpoint the optimal price you can charge in the market”.
After looking at all the factors you outlined, this statement sound phoney. With so many factors at play, words like “pinpoint” and “optimal” should not be uttered. They suggest a degree of certainty that is humanely impossible. Don’t peddle certainty in a fundamentally uncertain world. Moreover, you fail to look at one important issue: How much would an ordinary musician make during rush hour on a random day? Maybe he would make significantly less than $32. If that is the case, product quality does matter hugely. Note also that $32 for a 43 min performance implies an hourly wage of $44.65, which is not bad at all. Many good, non-celebrity musicians would be glad if they made that kind of money. He earns more in his “real” life, but that is because of the self-reinforcing loop of celebrity status. The difference between his earnings and that of good non-celebrity violinists is probably much higher than the difference in their craft. In other words, the price he commands in real life owes much to chance, not just to skill, skill being a necessary, but not sufficient, condition for superstardom. To talk of pinpointing optimal prices in such chance-dependent circumstances is meaningless. It only makes sense in the restricted conditions of the subway station. But since that is a constructed situation, it does not lend itself well to generalisations.

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