G.E.P.’s Pricing Philosophy

Here’s a secret that you probably already know. Nobody knows what’ll happen if you charge a price you’ve never charged before.

Not us. Not nobody.

Think about it. You have data on what has happened in the past. You can tell what happened to the demand for your products when you charged different prices. But how could that data, by itself, tell you anything about what will happen at future prices?

It can’t.

We need to marry the data to a model of how demand responds to price changes. The model won’t be exactly right, but it’ll be close. Good Enough.

That’s what we do.

However, the further prices move from their historical levels, the worse models perform because they no longer rely primarily on real, tangible data but on assumptions.

The trick to pricing is to treat it as an iterative process. Don’t try to jump to the optimal price. You can’t. It’s impossible.

There’s a better way.

Make small changes in the right direction. Not large changes in the wrong direction.

You want to move fast, though. We agree. But velocity isn’t speed.

Velocity = Speed x Direction

G.E.P. proposes a reasonable distance to move in the right direction. Not a great leap that relies on assuming a model is true, no matter how far we move from the status quo.

If you’ve ever gotten a price recommendation back from a consultant and said “yeah, we’re not doing that”, they likely didn’t follow this advice.

You knew instinctively that that price wouldn’t work in your market because you live and breathe it daily.

We don’t do that. We build pricing models and make pricing recommendations with humility.

We recommend sensible prices that increase revenue.

Contact us to see what we can do for you.

Learn more about our products.

Read our manifesto.