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The 10 Rules of Highly Effective Pricing: How to Transform Your Price Management to Boost Profits
Transform your organisation’s pricing strategy to take advantage of exciting new opportunities to unlock profitable growth In The Ten Rules of Highly Effective Pricing , renowned pricing strategist Danilo Zatta delivers an insightful and effective roadmap to taking control of your organisation’s monetization strategies and boosting profits. The author explains the 10 key elements to transform your price management; such as making pricing a CEO priority, instilling a culture of profit, selling value, differentiating prices, setting up the pricing governance, avoiding price wars and other rules to help capture opportunities for extraordinary profit and growth that companies not observing these rules simply miss out on. In this authoritative yet easy-to-read book, you’ll explore inspiring case studies of real-world companies that have realised the tremendous potential of pricing transformation to unlock their firms’ latent profitability. You’ll also discover the foundational pricing concepts you need to understand if you aim to drive incredible results in your company’s top- and bottom lines. This book also A can’t-miss resource for managers, founders, executives, directors, and entrepreneurs with a stake in driving growth and profitability in their firms, The Ten Rules of Highly Effective Pricing will also earn a place on the bookshelves of business and management students learning about contemporary pricing strategy.
'Company marketers spend a lot of time on promotion and take pricing for granted. Zatta's new book The 10 Rules of Highly Effective Pricing will help wake up company marketers to the profit coming from creative pricing.’ - Philip Kotler , S. C. Johnson Distinguished Professor of International Marketing, Kellogg School of Management, Northwestern University
'Company marketers spend a lot of time on promotion and take pricing for granted. Zatta's new book The 10 Rules of Highly Effective Pricing will help wake up company marketers to the profit coming from creative pricing.’ - Philip Kotler , S. C. Johnson Distinguished Professor of International Marketing, Kellogg School of Management, Northwestern University
304 pages, Hardcover
Published November 20, 2023
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Displaying 1 - 9 of 9 reviews
May 5, 2024
I was not familiar with Danilo Zatta’s work before finding this book. Since Kevin Mitchell, president of Professional Pricing Society provided a blurb, I decided to give it a read. Zatta posits 10 fundamental rules of highly effective pricing:
1. MAKE PRICING A CEO PRIORITY
2. DISSEMINATE THE CULTURE OF PROFIT
3. UNDERSTAND AND SELL VALUE
4. DIFFERENTIATE PRICES. It is fairer to discriminate prices for the same product or service rather than applying a uniform price.
5. CONSOLIDATE PROFITS BY INCREASING PRICES
6. AVOID PRICE WARS
7. CULTIVATE YOUR PRICE IMAGE
8. EMPLOY TECHNOLOGIES, DIRECTING ALGORITHMS
9. SET THE PRICING GOVERNANCE
10. DEBUNK THE [SEVEN] MYTHS OF PRICING
I mostly agree with this list. For number one, he tells the story of former General Electric CEO Jeff Immelt, who said: “Not long ago, a guy here named Dave McCalpin did an analysis of our pricing in appliances and found out that about $5 billion of it is discretionary. Given all the decisions that sales reps can make on their own, that's how much is in play. It was the most astounding number I'd ever heard – and that's just in appliances. Extrapolating across our businesses, there may be $50 billion that few people are tracking or accountable for. We would never allow something like that on the cost side. When it comes to the prices we pay, we study them, we map them, we work them. But with the prices we charge, we're too sloppy.” He cites studies that only one in five companies have a pricing team, and only 22% of the Fortune 500 have a dedicated pricing department. Even though pricing has been around since the mid-1980s in a serious way—with the founding of Professional Pricing Society—we have a ways to go. Zatta says the belief that pricing is strategic is not universally shared. I would add perhaps because accounting and finance think they know the answer with cost-plus pricing.
Consider Porsche. Zatta quotes “Wendelin Wiedeking, who headed the German automaker Porsche from 1993 to 2009, that they are almost ‘obsessed with pricing’, not wanting to miss any critical decisions.” Wiedeking also said: “When demand declines, we don’t lower price; we reduce production quantities.” Zatta says, “One of his mantras was to build the product around the price – that is, understanding the target price and target cost during the development phase.” The discussion of various examples, including the CEO price signaling and avoiding price wars (“In a war, the atomic bomb and price have the same limitation: they can only be used once”), are excellent.
I have some quibbles when he discusses quantifying value, even though a few pages later he admits “value depends greatly on subjective perception and varies depending on the number of people involved.” If you belief that value is subjective—and I do—then it make little sense to believe value can be quantified. Value is a feeling, and customers can change their mind quickly. Hence, you need to be a price searcher. I’d rather be approximately right with respect to value and price rather than precisely wrong. I also don’t believe that value is divisible, such as various features of one TV over another. Value is indivisible, and customers don’t make a distinction between the janitor and the chef in a 3-star restaurant. If the place is dirty, the value overall is greatly diminished, even if the food is excellent. I also don’t think any goods or services have intrinsic value (he says commodities don’t have any intrinsic value, but the truth no product has intrinsic value). They only have value with respect to the utility they provide, and that applies to things that may have sentimental value to us. If the sentiment changes, so will the value. I enjoyed the defense of price discrimination, and how it provides welfare benefits across the economy, a point I made in my book, Pricing on Purpose. Also not sure of the claim that “The most successful companies are those that leverage modern technologies for price management.” Given how only one in five have pricing departments I’m sure there are companies that are successful without modern pricing technology.
Rule 9 deals with pricing governance, and is thought-provoking. On the issue of pricing centralization or decentralization, he offers three possible models which provides a useful framework on how and where to set pricing authority.
If you’re a pricer, this is a book that should be in your library. It reminds us of what’s important, and contains some wonderful stories.
1. MAKE PRICING A CEO PRIORITY
2. DISSEMINATE THE CULTURE OF PROFIT
3. UNDERSTAND AND SELL VALUE
4. DIFFERENTIATE PRICES. It is fairer to discriminate prices for the same product or service rather than applying a uniform price.
5. CONSOLIDATE PROFITS BY INCREASING PRICES
6. AVOID PRICE WARS
7. CULTIVATE YOUR PRICE IMAGE
8. EMPLOY TECHNOLOGIES, DIRECTING ALGORITHMS
9. SET THE PRICING GOVERNANCE
10. DEBUNK THE [SEVEN] MYTHS OF PRICING
I mostly agree with this list. For number one, he tells the story of former General Electric CEO Jeff Immelt, who said: “Not long ago, a guy here named Dave McCalpin did an analysis of our pricing in appliances and found out that about $5 billion of it is discretionary. Given all the decisions that sales reps can make on their own, that's how much is in play. It was the most astounding number I'd ever heard – and that's just in appliances. Extrapolating across our businesses, there may be $50 billion that few people are tracking or accountable for. We would never allow something like that on the cost side. When it comes to the prices we pay, we study them, we map them, we work them. But with the prices we charge, we're too sloppy.” He cites studies that only one in five companies have a pricing team, and only 22% of the Fortune 500 have a dedicated pricing department. Even though pricing has been around since the mid-1980s in a serious way—with the founding of Professional Pricing Society—we have a ways to go. Zatta says the belief that pricing is strategic is not universally shared. I would add perhaps because accounting and finance think they know the answer with cost-plus pricing.
Consider Porsche. Zatta quotes “Wendelin Wiedeking, who headed the German automaker Porsche from 1993 to 2009, that they are almost ‘obsessed with pricing’, not wanting to miss any critical decisions.” Wiedeking also said: “When demand declines, we don’t lower price; we reduce production quantities.” Zatta says, “One of his mantras was to build the product around the price – that is, understanding the target price and target cost during the development phase.” The discussion of various examples, including the CEO price signaling and avoiding price wars (“In a war, the atomic bomb and price have the same limitation: they can only be used once”), are excellent.
I have some quibbles when he discusses quantifying value, even though a few pages later he admits “value depends greatly on subjective perception and varies depending on the number of people involved.” If you belief that value is subjective—and I do—then it make little sense to believe value can be quantified. Value is a feeling, and customers can change their mind quickly. Hence, you need to be a price searcher. I’d rather be approximately right with respect to value and price rather than precisely wrong. I also don’t believe that value is divisible, such as various features of one TV over another. Value is indivisible, and customers don’t make a distinction between the janitor and the chef in a 3-star restaurant. If the place is dirty, the value overall is greatly diminished, even if the food is excellent. I also don’t think any goods or services have intrinsic value (he says commodities don’t have any intrinsic value, but the truth no product has intrinsic value). They only have value with respect to the utility they provide, and that applies to things that may have sentimental value to us. If the sentiment changes, so will the value. I enjoyed the defense of price discrimination, and how it provides welfare benefits across the economy, a point I made in my book, Pricing on Purpose. Also not sure of the claim that “The most successful companies are those that leverage modern technologies for price management.” Given how only one in five have pricing departments I’m sure there are companies that are successful without modern pricing technology.
Rule 9 deals with pricing governance, and is thought-provoking. On the issue of pricing centralization or decentralization, he offers three possible models which provides a useful framework on how and where to set pricing authority.
If you’re a pricer, this is a book that should be in your library. It reminds us of what’s important, and contains some wonderful stories.
August 26, 2024
Do not miss this book.
It is simply great.
Lots of examples.
Easy to understand.
Relevant for pricing managers but even more for managers not familiar with pricing.
It is a clear 5 star review
It is simply great.
Lots of examples.
Easy to understand.
Relevant for pricing managers but even more for managers not familiar with pricing.
It is a clear 5 star review
August 27, 2024
Super helpful - opens up your eyes on the potential of pricing as a profit level.
Clearly a must read for anyone in business.
Clearly a must read for anyone in business.
August 27, 2024
Super pricing book!
August 27, 2024
I read The Pricing Model Revolution of Danilo Zatta and loved this book.
This new book of Danilo Zatta is even better: clearly a must for every book shelf
This new book of Danilo Zatta is even better: clearly a must for every book shelf
August 27, 2024
Really a joy reading this book as well as The Pricing Model Revolution
August 29, 2024
My favorite book with 'The Pricing Model Revolution'
August 29, 2024
Number 1 business book!
October 20, 2025
“Yo soy yo y mi circunstancia…” | “I am myself and my circumstances”
Ortega y Gasset, 1914
This famous phrase by Ortega y Gasset came to mind as I began writing this review—it also helps explain the somewhat surprising rating I gave the book.
The book, a bestseller by pricing literature standards, is an easy and engaging read. I would definitely recommend it to anyone starting their journey into pricing or to those seeking a light introduction or a broad overview of the pricing domain.
However, for a pricing expert, although it remains a pleasant and smooth reading experience, the book essentially aggregates and consolidates ten well-known pricing truisms—concepts that every pricing professional learns early in their career.
The ten principles (not quoted verbatim) can be summarized as follows:
1.Pricing is a C-suite domain.
2.Strive for a pro-profit mindset (avoid leakages).
3.Understand and sell value.
4.Promote and implement price segmentation.
5.Carefully define your price structure, price variation drivers, and price adjusters to maximize profit.
6.Avoid price wars.
7.Create and communicate a price image or perception to your customers.
8.Use data, technology, and models to define your prices (embrace the body of knowledge).
9.Define and uphold pricing governance rules.
10.Avoid preconceived pricing myths that negatively impact decision-making, such as: a) Market share and profit are positively correlated. b) My product is a commodity, so price is my only lever. c) Small price concessions have little impact on the P&L. d) Dynamic pricing is always a black box. e) Pricing is purely cost-based. f) Pricing management is only about increasing or decreasing prices. g) Customers are solely driven by low prices.
In a nutshell, depending on your starting point and objectives, I can either highly recommend this book—or simply consider it a “nice to have” if you have nothing else on your reading list. For the latter group, I could recommend several other books that would provide far greater value for your time investment.
(text revised by a llm)
Ortega y Gasset, 1914
This famous phrase by Ortega y Gasset came to mind as I began writing this review—it also helps explain the somewhat surprising rating I gave the book.
The book, a bestseller by pricing literature standards, is an easy and engaging read. I would definitely recommend it to anyone starting their journey into pricing or to those seeking a light introduction or a broad overview of the pricing domain.
However, for a pricing expert, although it remains a pleasant and smooth reading experience, the book essentially aggregates and consolidates ten well-known pricing truisms—concepts that every pricing professional learns early in their career.
The ten principles (not quoted verbatim) can be summarized as follows:
1.Pricing is a C-suite domain.
2.Strive for a pro-profit mindset (avoid leakages).
3.Understand and sell value.
4.Promote and implement price segmentation.
5.Carefully define your price structure, price variation drivers, and price adjusters to maximize profit.
6.Avoid price wars.
7.Create and communicate a price image or perception to your customers.
8.Use data, technology, and models to define your prices (embrace the body of knowledge).
9.Define and uphold pricing governance rules.
10.Avoid preconceived pricing myths that negatively impact decision-making, such as: a) Market share and profit are positively correlated. b) My product is a commodity, so price is my only lever. c) Small price concessions have little impact on the P&L. d) Dynamic pricing is always a black box. e) Pricing is purely cost-based. f) Pricing management is only about increasing or decreasing prices. g) Customers are solely driven by low prices.
In a nutshell, depending on your starting point and objectives, I can either highly recommend this book—or simply consider it a “nice to have” if you have nothing else on your reading list. For the latter group, I could recommend several other books that would provide far greater value for your time investment.
(text revised by a llm)
Displaying 1 - 9 of 9 reviews