Get the whole truth, not just anecdotes or opinions | Strategic Pricing Solutions
Last week a friend told me that her sister’s business had overpaid their taxes and without justification the government would not refund the overpayment. I was skeptical of the story and responded that there is a very clear process for requesting refunds of overpaid taxes or applying them to the subsequent year, and the IRS would not just ignore that. My friend was adamant that her sister would not make something up and she believed her. Not long after that conversation, I read an an article Misleading Statistics, by Thomas Sowell. In the post, Sowell focused primarliy on statistics that might be accurate in and of themselves, but are then used incorrectly to support something that is not true. Although these situations are very different, they are good reminders that people will believe statements, anecdotes, and plausible-sounding statistics that support their ingrained beliefs. It is therefore important to be skeptical of sound bite statistics, and require your team to provide the whole truth and nothing but the truth.
Pricing strategies and individual pricing decisions are areas where incomplete or misleading data are often presented. There is a general perception that higher prices will reduce sales, and management teams will often hear that a firm’s prices are an obstacle to greater success. While in a macro sense, there is some truth that prices will affect volume, prices are usually not the number one factor in a customer’s decision of whether and where to buy something. So simple statements that pricing was the reason business was either won or lost are usually not the whole truth. For example, these statements could be heard in businesses all over the world:
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