The Entrepreneur’s Bookshelf: The Art of Pricing by Rafi Mohamed

The Art of Pricing by Rafi Mohamed

In my earlier article on pricing, I spoke about the importance of associating a value with your service and product. It is always essential to unlock the hidden profits that can help to grow your business. On a primer to learn about the science and art of pricing, I recommend Rafi Mohammed’s “The Art of Pricing: How to find the Hidden Profits to grow your business”.

The book starts by introducing important concepts such as the culture of profit and value to an entrepreneur who needs to run a business. He also attempted to remove one of the biggest fallacies that a product’s price should be based on its costs. Consequently, he explained why value-based pricing does not work because of two reasons: competition from rivals and reputation that will induce branding to add extra value to the product. Till the middle of the book, Rafi introduces the value decoder framework to help the reader in asking the right questions before establishing a price for the product or service in a business. Subsequently, towards the end of the book, he introduced the various pricing strategies, such as differential pricing, versioning and segment-based pricing. He concludes with a concept of “fairness in pricing” where he outline four situations which fairness is a compelling reason to roll back prices. Those four situations are customer types, relationships, transparency and essential products with few substitutes. In all the situations involving pricing a product/service, Rafi stressed on the need to understand human psychology. So, I will recommend an earlier book from the bookshelf, Cialdini’s Influence (the six famous concepts of reciprocation, social proof, liking, authority, commitment and consistency, scarcity).

Hope that you will enjoy this book. Have a good day ahead.

Technorati Tags: Entrepreneurship, Singapore Entrepreneurs, Pricing

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