Tag Archives: pricing

Dark Value (repriced!)

man working on cool calculationsI’ve changed the price of Dark Value from $7.77 to $2.99. ¬†(It took a long time and my sticker gun is smoking.) You can get it here.

I do so on advice of learned council, Leora Kornfeld. I don’t believe there is anyone alive who knows more about digital DIY than Leora. See her endlessly interesting blog here.

My original plan had been to price the book at the cost of a Starbucks’ coffee. (Someone recently said this was fast becoming a new international¬†measure of value.) Then I thought, “what if the economists are right, that price is a signal of quality? Would Starbucks pricing discourage purchase?”

But Leora reassures me that “you have to make cheap it enough so people don’t have a chance to pause and think about it” and I think $2.99 is that price. (Those of you who purchased a copy of the book, family members mostly, please send me your email and address and I will send you a crisp $5.00 bill.)

 

“It” extraction (killing a brand softly)

Last week, quietly and without fanfare, ThinkPad decided not to renew its flagship model, the X301. 

The X301 is a beautiful machine.  It has that wonderful ThinkPad keyboard, a huge screen, and it weighs only a little bit more than a ballet slipper.  It is a miraculous demonstration of what design and engineer can do.

And now it’s done for.  Lenovo is proposing the ThinkPad T410s as the x301s replacement.   When called upon to explain himself, Lenovo Marketing Director, Wang Lipin said that T400 series was more powerful than the x301, and cheaper by a thousand dollars.

The trouble: the T400 doesn’t have “it” quality.  It is a business machine in the most pedestrian sense of the term.  No trace of elegance.  No claim to being the pick of the technological litter.  No “wow” factor.  The T410 is just another business machine. 

This takes us into one of the thorniest issue in the branding world.  What is “it?”  And what’s “it” worth? 

It’s a difficult discussion because “it” is inscrutable.  We can point to “it.”  We know “it” when we see it.  But when it comes to anatomizing, measuring, and pricing “it,” well, this proves difficult and all the marketing and pricing models break down. 

This would be a mere irritation if “it” weren’t such a gusher in the tech world.  But it is.  All of us can buy a phone that is smarter, faster and cheaper than the iPhone.  But none of these has “it” status.  We may not be able to measure “it,” but we don’t hesitate to pay the premium it demands of us.  

Apple turns out to be pretty good at “it.”  In fact, Apple now pretty much owns “it” in the computer world at the moment. 

Except when it come to the lightest, full function lap top.  The Apple entry in this category, the MacBook Air, is a pretty good machine.  But that’s all it is.  A pretty good machine.  It doesn’t have “it.”  Until last week, that belonged to ThinkPad.

So why did Lenovo perform an “it” extraction?  That’s clear enough.  It was making a rational business decision.  It was applying a pricing model.  It may well have been working from Robert Dolan’s exemplary text book on the topic.  This was a perfectly sensible marketing decision.

But it was of course an absolutely disastrous business decision, one that may cost Lenovo dearly.  When Lenovo took the “it” out of ThinkPad, it gave up the only branding advantage it had over Apple.   Sadder still, it destroyed much of the brand value that prompted Lenovo to buy ThinkPad from IBM in the first place.  Having taken on a brand that would help it fight its way out of the commodity basement, it has now descended into that commodity basement, slamming the door behind it as it goes. 

Lenovo’s “it extraction” was a good, rational, pricing decision.  But if we are not protecting “it” when our designers and engineers gift us with it, if we are not building the brand that protects us from the commodity basement, our decision, rational by some narrow standard, is wildly irrational by any broader one. 

Commerce isn’t good at imponderables.  And “it” is nothing if not imponderable.  The fault lies largely on the side of the design house and the ad agency.  When asked to measure and account for “it,” and every cultural moments has it’s its (it girls, it brands, it activities, it restaurants, it industries), designers and agency people demurred.  “Oh, listen, don’t bother your pretty little heads about it,” they said to the client.  “This is what you pay us for.  We’ll keep track of it.  You just get product on the shelf.”  (If only they had a Chief Culture Officer.)

So it’s not entirely surprising that pricing models don’t have anything to say about “it."  And it’s not surprising that senior managers boot this sort of decision with some frequency.  But when you think about how much value “it” creates for us, how essential it is to the life of the corporation, and how much there is at stake in terms of careers and brands, isn’t it time we did better?   

Put these on the business conference agenda.  What is it?  What’s it worth?  How do we price it?  How do we manage it?  In the meantime, hire a CCO.  

References

Dolan, Robert J., and Hermann Simon. 1997. Power Pricing. Free Press.  

Lai, Richard. 2010. “Lenovo ThinkPad X300 series to be phased out, replaced by T400 this year.” Engadget. here. (Accessed July 21, 2010).

McCracken, Grant. 2009. Chief Culture Officer: How to Create a Living, Breathing Corporation. Basic Books.  

Hobbes, John. 2010. “BREAKING: Lenovo ThinkPad X301 to be discontinued, supplanted by T410s.” Logic ThinkPad. July 13. here. (Accessed July 21, 2010).