Chapter 6: Pricing Discipline

There are several excellent books and scholarly articles on optimal pricing. In keeping with the rest of the book, our focus here is to discuss pricing disciplines that will generate growth. Certainly, as a matter of good management practice, optimizing pricing and managing costs will improve margins and therefore should be pursued. Our focus is on growth over and beyond that is possible by streamlining operations using methodologies such as agile manufacturing, lean manufacturing, Kaizen; Toyota Production System (TPS); cost control; experience curve management, and other cost reduction methods.

A fundamental perspective we use here is that customer demand is a result of the interplay or struggle between desirability and affordability for customers. We realize that affordability and desirability are not fully independent of each other but are the outcomes of complex affects that in turn arise out of individual conditions and social interactions. Understanding of this interplay provides us opportunities for growth via the disciplines of budget fitting, line filling, designed bundling, and designed unbundling.