A common proposed remedy for high U.S. pharmaceutical prices is to import cheap drugs from Canada. It’s a nice fantasy to believe the remedy to this major issue is as simple as trucking discount pills over the border.
For clarity, this is not a political piece as both Democrats and Republicans have advocated this remedy. Here’s why this strategy won’t work: Suppose you are the head of pricing for a major pharma company and observe low-priced drugs targeted to Canada are now being used in the U.S.. As a result, your company’s profits are declining. What would you do? Of course, you’ll do everything in your power to curb this importation.
For more insight on this important issue, please check out my latest piece for the Harvard Business Review. For latest updates on key issues, follow me on Twitter @cultureofprofit.
Posted on February 12th, 2016 (0 Comments)
One key “art” of pricing is finding segments that are willing to pay different prices (higher or lower) for your product and designing targeted strategies to “extract” their willingness to pay. And while the market encourages this creativity – which leads to higher profits and growth – the result is a specific gender, race, or income class systematically pays more than others.
The key question is whether this result – often unintentional – is in line with your company’s morale compass? Just because the market blesses a pricing strategy doesn’t mean it’s ethically right.
Please check out my latest piece for the Harvard Business Review which discusses the ethical implications of free market pricing. And as always, thank you for reading!
Posted on January 29th, 2016 (0 Comments)
When business is strong, it’s easy for arm chair pricing strategists and economists to chant, “Raise your prices.” Economists will defend their position by citing “supply and demand” – a fundamental concept of Econ 101. It’s ingrained in pricing strategists to boost prices to “capture value.” I think raising prices to capitalize on what may be a short term blip in demand can be a big mistake – often detrimental to the long term health of a business.
Please check out my latest – actually my 75th – piece for the Harvard Business Review which discusses the pricing strategy used by the Franklin Barbecue, an Austin, Texas BBQ joint which Bon Appetit magazine has anointed the best barbecue in America. Pitmaster Aaron Franklin’s strategy for pricing (as well as his barbecue) of “low and slow” provides insight for all people involved with pricing can learn from.
Thank you for reading and please follow me on Twitter: @cultureofprofit
Posted on November 12th, 2015 (0 Comments)