You Can Raise Prices in a Downturn

In turbulent times like the present, the common wisdom when demand is down and competitors are fighting for every order is to cut prices, right? Not always.

If you and your customers understand the value of your product and/or service, you can—and should—charge more for delivering more by using "performance pricing".

This idea comes to me from work done by Harvard Business School Professors Frank Cespedes and Benson P. Shapiro who joined with former McKinsey Consultant Elliot B. Ross, President of the MFL Group, to write the paper "Performance Pricing in Tough Times."

Cespedes says, "Pricing builds or destroys value faster than almost any business action, especially in tough and uncertain economic conditions when price is a key and visible strategic choice. Conventional wisdom has firms cutting price in these circumstances. But most industries typically allow few firms to build a sustainable, low-cost business model, and once established, the very success of those low-cost competitors makes it difficult for others to duplicate."

In their paper, "Performance Pricing in Tough Times", the team of Cespedes, Shaprio and Ross describe their research of the many companies that don't compete on absolute cost advantages and low price. These firms can and should compete on the basis of initiatives for which their customers willingly pay higher prices.

Can this apply to your company?

Click here for the complete article to learn more about performance pricing. It's worth the read.

Teamwork - "The Wisdom of Wolves"

In his recent blog, Mac Anderson, founder of Simple Truths and Successories, Inc. (see www.simpletruths.com) comments on "The Wisdom of Wolves" by Twyman Towery. In his book, Towery describes a society where teamwork, loyalty and communication are the norm rather than the exception. As CEOs and business owners, we can learn from the wolves regarding team building as we strive for success in our businesses.

Here's an excerpt from his book:

"The attitude of the wolf can be summed up simply: it is a constant visualization of success. The collective wisdom of wolves has been progressively programmed into their genetic makeup throughout the centuries. Wolves have mastered the technique of focusing their energies toward the activities that will lead to the accomplishment of their goals.

Wolves do not aimlessly run around their intended victims, yipping and yapping. They have a strategic plan and execute it through constant communication. When the moment of truth arrives, each understands his role and understands exactly what the pack expects of him.

The wolf does not depend on luck. The cohesion, teamwork and training of the pack determines whether the pack lives or dies.

There is a silly maxim in some organizations that everyone, to be a valuable member, must aspire to be the leader. This is personified by the misguided CEO who says he only hires people who say they want to take his job. Evidently, this is supposed to ensure that the person has ambition, courage, spunk, honesty, drive - whatever. In reality, it is simply a contrived situation, with the interviewee jumping through the boss's hoops. It sends warnings of competition and one-upmanship throughout the organization rather than signals of cooperation, teamwork and loyalty.

Everyone does not strive to be the leader in the wolf pack. Some are consummate hunters or caregivers or jokesters, but each seems to gravitate to the role he does best. This is not to say there are not challenges to authority, position and status - there are. But each wolf's role begins emerging from playtime as a pup and refines itself through the rest of its years. The wolf's attitude is always based upon the question, "What is best for the pack?" This is in marked contrast to us humans, who will often sabotage our organizations, families or businesses, if we do not get what we want.

Wolves are seldom truly threatened by other animals. By constantly engaging their senses and skills, they are practically unassailable. They are masters of planning for the moment of opportunity to present itself, and when it does, they are ready to act.

Because of training, preparation, planning, communication and a preference for action, the wolf's expectation is always to be victorious. While in actuality this is true only 10 percent of the time or less, the wolf's attitude is always that success will come-and it does."

This and other great books on leadership are available at www.simpletruths.com