How the Game of Pricing Is Changing

A year has elapsed since my colleague Arnab Sinha and I published our book Game Changer with the goal of changing the conversation around pricing. The field of pricing strategy needed a reset, because business leaders were constrained by outdated assumptions that limited their options and their ambitions. That was the genesis of our book.

But you don’t reset a field like pricing overnight. That’s true from the theory side and from the practical side. The game of pricing – and the conversation around it – has indeed begun to change over last 12 months. If we had to single out one change in particular, it would be the increasing focus on fairness within the ongoing debates and discussions around pricing.

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Fairness as a new dimension of pricing strategy

Think for a moment about what is top of mind for customers and consumers as 2024 draws to a close. They remain unsure of how dynamic pricing, artificial intelligence, and the aftermath of record-high inflation will affect them. That makes the question “what is a fair price?” more relevant and urgent than ever.

We baked fairness into our definition of pricing strategy in Game Changer. A pricing strategy is “a business leader’s conscious decisions on how to shape their market by determining the amount of money available, how that money flows, and to whom. It reflects the company’s philosophy on how to acquire, retain, and satisfy customers by sharing value with them fairly.”

That’s why we asserted that the right pricing strategy can change the trajectory of a business, a market, and even society. Many people have spoken to us about how Part IV of the book – the part about how pricing affects society – has resonated with them. When we devoted two chapters in Part IV to defining and applying fair pricing, we had no idea they would quickly gain the relevance and urgency they currently have. It’s hard to discuss anything about pricing today without some mention of the concept of fairness.

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The impact of the seven pricing games

While the rapid emergence of fairness as a central tenet of pricing was a pleasant surprise, the feedback to our frameworks was a pleasant affirmation. We learned that people were finding their own ways to translate our unified theory of pricing into the unified practice of pricing. That’s where we have seen the seven pricing games add considerable value to the conversation.

Most people have told us – in their own way – that they like having a new conceptual framework that has real-world relevance. Our pricing framework is helping them make sense of things that are happening in their professional and private lives and is also helping them discover some agency to influence those events.

Some readers told us they like the framework at a high level. They connect with the definition of pricing strategy, the seven pricing games, and the real-life stories about how to win them. Others appreciate the deeper levels of detail and have said they are already re-reading the book so that they can understand and absorb all the nuances behind the framework.

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Where does the pricing conversation go next?

That’s almost impossible to say reliably. What we can say with confidence, however, is that artificial intelligence is accelerating two powerful trends in pricing: the shift to dynamic pricing in more industries and the emergence of more opportunities for personalized pricing. It is becoming increasingly easy to imagine personalized, near real-time pricing as technically feasible and commercially practical.

What is the counterweight to those trends to make sure that companies implement dynamic personalization in a way that benefits customers rather than taking advantage of them? The operative word, once again, is fairness. We expect fairness to become even more important for companies to consider as they figure out how to use advanced technologies to create more value for customers and share it with them.

As always, please continue to share your thoughts and questions with us. If you haven’t ordered your copy of Game Changer yet, you can do that HERE. Thanks for your interest and support.