ABSTRACT
Failure to understand clearly when and when not to lower price is at the heart of two of the pricing traps this chapter addresses: "If we lower our price, we will gain share", "We should drop our price to win this deal." Using price rather than value to close deals is at the heart of the other two pricing traps the chapter addresses: "At the end of the day, customers only buy on price", "We have to set our prices at the market price." The chapter shows how generalizing the four statements above to situations for which they were not intended only invite potentially fatal consequences. It identifies under which conditions these principles do and do not apply and what to do as an alternative. It demonstrates what executives can do to break through the traps and seize a competitive advantage through innovation in pricing practices.
