Posts by: Tim J. Smith, PhD

How to Stop Discounting Practices of Salespeople from Destroying Your Profits

By Tim J. Smith, PhD July 3, 2016

Neither revealing the company’s cost structure to front line salespeople, nor managing sales performance metrics and salespeople’s compensation with constantly varying variable costs isn’t strategically beneficial or managerially realistic. Alternatively, profit sharing plans have been used, but they don’t reward individual performance, just team performance.

Profit-Based Incentives: Doable and Valuable through Alignment of Goals

By Tim J. Smith, PhD June 7, 2016

While deal points are a powerful tool, implementing them requires careful thought. List prices, sales kickers, commission rates, and various approximations through product groupings have to be determined to create a workable plan. And, once a workable plan is defined, sales managers may determine that sales territory realignment is furthermore in order.

Creative Destruction Strikes Again

By Tim J. Smith, PhD May 9, 2016

To embrace creative destruction is a choice. We can either lament that we fell on the destruction side of market forces, or we can throw ourselves into the creative side of market forces. When market forces destroy your industry, embrace it as the opportunity to create a new path — don’t wait for some third party to have pity on you and fix it for you. Fix it yourself.

Hearsay When Proof is Illegal: A Legal and Ethical Pricing Challenge in Business Markets

By Tim J. Smith, PhD April 4, 2016

Agreed, the signal may not be exact when using publically available information to benchmark competitive prices. It may not be exactly precise even when found from market research. But it will generally suffice for most pricing questions. In many cases, it must suffice.

Are Drug Companies Ripping Us Off?

By Tim J. Smith, PhD March 4, 2016

Pharmaceutical formularies, like other medical solutions, are best priced according to the value they deliver relative to the alternative treatment for the target disease. If the new solution provides more value, it should have a proportionately higher price. If it provides less value, it should have a proportionately lower price. This is the concept behind value-based price: price to reflect the prices of alternatives adjusted for their differential value for the target customer.

Professional Service Pricing: Beyond the Hourly Rate and into the Deliverable

By Tim J. Smith, PhD February 4, 2016

In deliverable based pricing, prices are tied to deliverables, not effort. In order for that to work in favor of the service provider, that provider has to know, plan, and execute what it takes to achieve the defined deliverable with the client. (Laggard service providers may be afraid of deliverable based pricing precisely because of their project management skill-set deficit – but it is something they can learn.)

Generic Drug Pricing Practices under Scrutiny

By Tim J. Smith, PhD January 3, 2016

High barriers to entry must be keeping competitors from providing alternatives to off-patent generic drugs. What could be the source of these barriers to entry?
It isn’t the lack of know how. Many firms are able to produce chemicals, even specialized chemicals in the life sciences. And, that is what a drug is: it is a chemical. As observed in animal health care, agricultural chemistry and many other specialty chemical companies: competition keeps prices relatively low. Yet, in human life sciences, there is insufficient competition.

Standard Service Pricing – Easy Enough but Not So Easy

By Tim J. Smith, PhD December 3, 2015

The use of comparable equivalents leads to an improvement in the meaningfulness and accuracy of the benchmark approach, yet the determination of what constitutes the comparable equivalent is made by the consultant him/herself. This approach is fraught with error. Does the lawyer think too highly of him/herself or is he/she being too timid?

An Overly Simplistic Approach to Pricing Strategy

By Tim J. Smith, PhD November 5, 2015

Pricing strategy is not executed by simply raising prices. If that’s all it took, then every fool would do pricing strategy, and every business owner would have a clear pricing plan.

Big Show Idea Vlog

By Tim J. Smith, PhD October 6, 2015

Join Tim J. Smith PhD in a new video blogging series covering what’s affecting pricing, the economy and you. In this month’s vlogs, gain insight on everything from Imaginary Pricing to liquor sales in Africa.

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.