The Strategy and Tactics of Pricing: A Guide to Growing More Profitably

Price for value, not cost: Total Economic Value = Reference Value + Differentiation Value (EVE Model)
The Value Cascade: Six gaps where value leaks — Value Creation → Communication → Structure → Policy → Setting → Competition
Three principles: Value-based, proactive, profit-driven
Test every price change: %BE = -ΔP / (CM + ΔP) — if you can't sell enough extra volume to clear breakeven, don't cut
Never compete on price alone: Price wars are negative-sum games; differentiate or segment instead

Situation	Do This	Avoid This
Setting a new price	Estimate EVE relative to NBCA, then position within viable range	Cost-plus markup or matching competitors
Customer demands a discount	Apply give-get: concede only if buyer concedes scope, terms, or volume	Ad hoc discounts that erode price integrity
Competitor cuts price	Run breakeven analysis; react selectively if at all	Reflexive across-the-board matching
Launching a new product	Choose skim, penetrate, or neutral based on market conditions	Defaulting to low price "to build share"
Different customers value differently	Design price fences and metrics to segment	Uniform pricing that leaves money on the table
Evaluating a price increase	Calculate breakeven volume loss you can afford	Assuming volume will drop proportionally
Sales team requesting lower prices	Check price waterfall for existing profit leaks first	Approving without quantitative justification
Recession or downturn	Segment by value; cut selectively, not across the board	Panic-driven blanket price reductions

"Strategic pricing is the coordination of interrelated marketing, competitive, and financial decisions to set prices profitably." — Nagle & Müller

Overview