Introduction to Contextual Pricing

Everything should be made as simple as possible, but not any simpler.

—ALBERT EINSTEIN (C. 1933)

We would all like to cultivate better pricing at our companies: pricing models that fit the market, an optimum price tag, strongly supportive systems, and foundational price strategy. We would like pricing coherent with brand, product, and channel, which inspires confidence—and is as simple as possible.

Many smart people have proposed simplifying principles to help explain pricing results. Value, costs, messaging, and customer frames of reference have all afforded insight. Each construct offers a crisp and simple explanation—but appears to fail in some market situations. Those failures are painful when encountered, and they discourage management from giving pricing the attention it deserves—that a company deserves.