Posts by: Tim J. Smith, PhD

Will PlayStation VR Succeed?

By Tim J. Smith, PhD November 1, 2016

Not that I can or am stating that everything Sony did was perfect. And I am definitely not stating that everyone will find Sony’s design tradeoffs to result in a good offering. But they did define their target market and product design requirements in such a manner broadly appearing to be compatible with a highly successful product, launch.

Pricing Done Right – Events and Press Roundup

By Tim J. Smith, PhD October 5, 2016

September was an important month with the success of Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies. Check out some of the celebration and press below, and don’t forget to pick up your own copy!

What Exactly Is Target Transaction Pricing?

By Tim J. Smith, PhD September 1, 2016

Notice the deal specificity. Target prices are deal dependent. That means it can vary between customers and between selling opportunities with the same customer. Target prices may be customer dependent, product mix dependent, quantity dependent, promotional timing dependent, competitive situation dependent, or even cost dependent.

Pricing Done Right

By Tim J. Smith, PhD August 3, 2016

Pricing Done Right provides a roadmap for improving pricing practices within any market-oriented firm. It provides a framework for managing pricing decisions in any organization. It clarifies the best practices for defining the organizational culture, architectural hierarchy, and routines for getting pricing done right.

Will Culling Low Margin Items Actually Destroy Profits? An Exploration into Economies of Scope

By Tim J. Smith, PhD July 3, 2016

Firms often sell low margin items because customers seek the low margin items and, when buying, buy higher margin items as well. These low margin items can make sense through their enablement of the firm to profit from economies of scope. Killing low margin items can make sense in some cases, but other cases doing so will kill the firm.

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.

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.