As we start our pricing series, we often get asked if pricing is art or science? Our answer: 90% science, 10% art. Many however, would dispute this response and in some products and industries the ability to capture, analyze and model data in near real time, makes pricing resemble a dark art.

It is our view that timing and audience are the key parameters for pricing optimization. The airline industry is a pricing theorists and practioners playground. Pricing optimization for any individual flight can lead to a full plane with 10's if not 100's of different prices for each seat. In theory any wasting asset should decline in price until it is reaches its shelf life. Airline seat pricing defy's intuition, that as flight time approaches the airline may reduce or increase the seat price or cancel the flight to maximize revenue.For most of our customers, pricing involves, at a high level, the core product or service, timing for the customer, and delivery that is less dynamic than airplane seats.

As with many, we believe in establishing a pricing model for each good or service and identifying the value parameters for each core offering. Where most of our clients get bogged down is in defining what do their customers value. Or even more fundamentally who are their customers and who should be their customers. This information may be unavailable to them or difficult for them to organize, they layer opinion and assumptions onto the pricing model that migrate a mathematical construct into a dark art. 

We have driven huge revenue increases from our customers products and services by making subtle changes in features, packaging, placement, terms and conditions that add zero cost to our clients. How? We asked their customers what it cost them if they didn't have the product at a certain time or if it was missing individual features. What was the value if they could have it when they needed it. 

If there is an art to pricing it is in asking the right questions of your customers and listening to their answers. If you master these skills you will be a pricing wizard and scientist.