This story is the final part of a series of articles “Horror Stories in Pricing – When Pricing Goes Wrong”. The seventh story can be found here.
Follow along with the audio version of the story below:
“Cuckoo!” a previously unnoticed cuckoo clock yells at the top of its tiny paper lungs.
Michael almost jumps out of his skin. An ice cube performs a roustabout on the rim of his glass before falling back into the amber liquid with a satisfied plop.
“Pay it no mind”, Eric grins. “Just a little something I picked up on my travels. And I think it spoke a fitting judgement on the previous yarn I told you. It’s like a Swiss Nostradamus, minus the beard.”
Michael is feeling a little tipsy at this stage. The office is gloomier than before and had the overly eager wooden bird not given him a jolt, his already heavy eyelids would have got the better of him. He shakes off his weariness, still eager to glean as much know-how from Eric’s tales of pricing woe as possible. Now it is his turn to shatter the silence.
“Eric, you were about to tell me the last story”, Michael rasps, his voice roughened by the long session and dehydrating effects of the rich single malt Eric seemed so keen to share.
“Indeed, Michael, indeed.” He shudders, his teeth chatter as he recalls the last tale of terror.
“Oh Michael”, he almost whimpers. “Pricing can be rewarding, but it can also be so cruel when you do things wrong. Any fool worth their weight in tax rebates can tell you that incentivizing your customers’ loyalty is a wonderful concept. But when you lose the ability to manage promotions, discounts, campaigns and special pricing, as many wise pricers will tell you, you’re up bankruptcy creek without a cash flow.
It saddens me to tell you this tale as it happened to a person so sweet, you got type 2 diabetes just looking at her! Her name was Heidi Down and everything she did, she did out of the goodness of her heart.”
Eric examines his nails and files them concernedly.
“She was the owner of the furniture store – Sofa So Good – whose furnishings were a thing of legend. Aside from the couch department, they also did beds that were so soft, it was like lying on moss in a beautiful woodland. The beds even had their own fan club, The Bed Heads, who would share their love of their delicate boudoirs online in user groups. Bliss, sheer bliss.
Heidi wanted to give something back to those loyal fans and devised a coupon system to allow them to have discounts on their purchases – to spread the love a little, so to speak. She sent emails with discount offer vouchers to her beloved Bed Heads that they could print out and bring to the store. And she did all this with a delighted giggle – like a teenager learning its parent’s credit card number and PIN at Christmas time.
Sadly, her email send finger got a little trigger happy. What had started as a gentle trickle of offer emails turned into a torrent of discounting hell. Her loyal fans had so many vouchers that they needed new beds just to store them under.
Her fatal flaw was she had failed to add an expiry date on the discounts, and, her terms and conditions stated that customers could use multiple vouchers for the same purchase. It got to the point where the customers had so many vouchers that not only could they get every item in stock for free ten times over, Heidi actually owed them change afterwards!
Needless to say, Heidi’s store closed down within a week. A total tragedy. Couldn’t have happened to a nicer person!”
“What happened to Heidi?”, Michael asked, a tear welling in his eye.
“I married her. And now we have two beautiful children. No, three. I was never any good at counting children – advanced pricing, now that’s an entirely different matter!”
“Michael?” Eric inquires. “Do you now have a better idea of what a good pricer is? Those pitfalls that a properly implemented pricing strategy and the proper software can help to avoid? I do hope so. Let these tales be a lesson to you and I hope that I never again have to hear of such horrors.
You may go now. But never forget, pricing fear is something that lurks in the darkness corners of your spreadsheets. It waits, and when you least expect it, pounces on you and reveals your mistakes! Don’t let it happen to you. Take my tales and live by them. Be a better pricer, Michael, in everything you do!”
And with a weary sigh, Eric falls back into his chair, and the room is once more filled with silence.
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