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Contextual Pricing by Cecilia Nguyen, John G. Hanson, Michael Barzelay, Robert Docters

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Chapter 8

Dangerous Ways to Reduce or Increase Price

Now, now my good man, this is no time for making enemies.

VOLTAIRE, ON HIS DEATHBED, IN RESPONSE TO A PRIEST WHO ASKED HIM TO RENOUNCE SATAN

Most managers know there is a right way and a wrong way to change price, and a right time and a wrong time to change it. The difficult part is determining how and when.

Dangerous price moves can destroy your business, either with sharply reduced revenues and/or competitive inroads. Yet many managers have little awareness as to which are the most dangerous price actions. For instance, the most dangerous price move by far is lowering your price, because it can alienate customers.

The Case against Lowering Prices

Many businesses lower their prices, expecting ...

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