If Price is Your Most Valuable Asset, Why Put it out There for Everyone to See?

Of all the intellectual property your organization possesses, nothing is more important than your prices.  But, unlike all of your other intellectual property, which you protect with impenetrable secrecy (i.e., the recipe for Coca-Cola, the manufacturing process of an Intel microprocessor, the not-so-open source code for Microsoft Office, etc.), you indiscriminately broadcast your prices to the market and lay it bear for all to see.  Yet, there is so much proprietary knowledge echoed in this single price, and you essentially give this knowledge away for free to your competitors.

A single price captures everything that makes you special.  It embodies the value the market sees in your product, the value of your product in this particular season, the value your brand wields in the marketplace, the degree to which your product satisfies the needs of specific customer segments, the degree to which buyers are willing to pay for your reputation, the degree to which buyers are loyal to your product despite competing products, etc.

Once you reveal your prices to the world, your competitors instantly know how much brand equity you have, they immediately see how much value your product has in this particular season, they immediately see your reputation is strong, they are able to assess the amount of loyalty you command, and so forth.  By putting your prices out there for all to see, you implicitly give your competitors a leg-up.  To compete against you, all they need to do is see your price and shoot for something just a tad lower.

What would a future world look like where you only… Read the rest of this entry »

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