Reed Holden on Pricing

Regular readers will know Reed Holden, one of the giants in the pricing profession.

He has a video interview on pricing that I found quite interesting.

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Comments

  1. Ed Kless says:

    The video is quite good; however, there is one element that is disturbing to me ? his use of the poker player analogy. I understand it, especially with respect to purchasing agents, but it implies a zero-sum-game mentality that I find repugnant, irrational, and perhaps unethical.

    I believe business is about creating value for a customer and that price is a percentage of that captured value. No transaction should be entered into unless both parties find it to be mutually beneficial. Not to do so would be immoral.

    Anyway, off of my high horse.

  2. I hear you, Ed. It bugs me too, and I’ve dialogued with Reed about what a poor analogy the zero-sum poker game is, ignoring the economic fact that profit is made on both sides of a transaction.

    Maybe if we expressed it this way.

    In every single transaction, BOTH the buyer and the seller earn a profit.

    Even with the high price of gas, if I fill my tank that means that I’m deriving more value than the cash I’m giving up.

    This is a central reason economists focus on both sides of the transaction, but accountants have to have everything balance on only one side.

    In the real world, debits don’t equal credits. And the difference is the value we derive over the cash we give up.

    Who knows, this might be even more confusing. But we have to reject the zero-sum poker analogy. That’s not how free markets create wealth.

Trackbacks

  1. […] you use poker as an analogy for sales you set up a “zero-sum game mentality”. Here is a video from the VeraSage Institute that helped me with this realization. Read the comments below it. In […]

  2. […] you use poker as an analogy for sales you set up a “zero-sum game mentality”. Here is a video from the VeraSage Institute that helped me with this realization. Read the comments below it. In […]

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