In this enlightening episode, Ron and Ed sit down with Tim Smith, a leading pricing expert and author from Wiglaf Pricing. Together, they dive into the impact of philosopher John Rawls’ Theory of Justice on economic decisions and pricing strategies. Tim shares insights into how Rawls’ principles, like fairness and the “veil of ignorance,” can shape corporate pricing decisions, from the boardroom to the balance sheet. Join us as we explore pricing Spineometers, CEO decision-making, and the ethical considerations behind profitable pricing in today’s market.
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SHOW NOTES
Segment one
Tim Smith last joined us on Nov 4, 2016. Let’s just say that some “stuff” has happened since then. Learn more about Tim at https://wiglafpricing.com/
Tim has a PhD in physical chemistry! Swaps, futures, and other financial derivatives were interesting to him but he wanted to work on something deeper
Tim referenced his book today, “Pricing Strategy: Setting Price Levels, Managing Price Discounts and Establishing Price Structures” - check it out at this link https://www.amazon.com/Pricing-Strategy-Discounts-Establishing-Structures/dp/0538480882
Check out “Unlocking Pricing Potential Using the Pricing Spineometer with Tim Smith”, hosted by friend of the show Mark Stiving @pricingcoach https://www.youtube.com/watch?v=BqlcN3jVJmQ
Segment two
A snippet of pricing GOLD from Tim Smith today: Anybody who has to sell something on a long term contract and doesn't know the input cost, and is a significant portion of the price, should consider index based pricing.
“There's a feeling among Wall Street and among many executives, that price is simply a function of supply and demand. That you don't need to worry about it. The market will take care of it.” —Tim Smith, pricing expert at Wiglaf Pricing
Where does pricing belong in an organization? “It's definitely industry dependent. What I want is that pricing person to have a direct line to the CEO.” —Tim Smith
“When I'm just trying to match supply and demand, what they actually found is that they'll raise the prices for the Uber and but that doesn't actually increase the supply of Uber drivers. It just makes money for Uber.” —Tim Smith
Segment three
Is dynamic pricing fair? “What's fair is culturally relevant so, in the United States, I can't do price fixing and in Saudi Arabia, I’m encouraged to do price fixing.” —Tim Smith
“In a global corporation, you can take your best practices that you already have from other countries and apply them back to the wherever you live. And this is the need for building a pricing community within a corporation” —Tim Smith
Does pricing follow strategy or does it lead it? “It’s both. One of the problems I see often in medical tech is they try to make the best thing in the world. But the ASCs want the cheapest thing. So you have a disconnect of what you're making vs the market
Segment four
“Under a free market society that’s properly regulated (there's a role for government), anybody who enters into a transaction is doing so because it leaves them BETTER OFF.” —Tim Smith
“Milton Friedman said the only purpose of a company is to produce profits. That is its job. That is the very definition of a corporate psychopath.” —Tim Smith
A big THANK YOU to Tim Smith for joining us today. Check out more of his work at Wiglaf Pricing https://wiglafpricing.com/
Bonus Content is Available As Well
Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.
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