Yesterday, we reviewed brand trust. Now, we examine pricing and ethical practices. In acquiring brand trust, following ethical practices becomes crucial. Consider our article from last month on the ethics of pricing by hospitals.
How to Keep Brand Trust: Pricing and Ethical Practices
For this post, we examine interesting insights from Pragmatic Institute on the topic. Among the highlights:
PRICING AND ETHICS ARE TWO WORDS RARELY HEARD TOGETHER. Ethics is about being fair. Pricing is about capturing as much value from your buyer as possible. What could possibly be ethical about pricing?
In defense of the pricing profession, most pricing is extremely ethical and most pricers act ethically. In any transaction, both parties enter into it willingly, and both are better off after the transaction. That seems ethical to me.
As an example, say a company makes a product that costs $100 to build. It will only sell its product at a price that is more than $100. A buyer has a problem that the product solves, and that problem costs her $500. She will only buy at a price below $500. At any price between $100 and $500, both parties are better off if the transaction occurs.
Seems fair and ethical. But there are many pricing tactics and strategies that seem unethical. Figure 1 plots those tactics on a chart, showing how common they are and how ethical they seem.
For a detailed discussion of the various pricing tactics shown in the figure, just click it.