Episode #0056 - Oscar Wilde in the pricing department!

In Lady Windemere's Fan, Oscar Wilde had Lord Darlington quip that a cynic was 'a man who knows the price of everything and the value of nothing.' As with so much of what Wilde wrote or said, it's more than just a nice turn of phrase – it hits at the heart of the problems of society. Lady Windemere's Fan was written in 1892, but what Wilde wrote is even more true now than it was 122 years ago. We discuss what it means in pricing - and is it overused and cliched - or does it offer anything value.   If anyone has spent any time whatsoever in the pricing profession you have almost certainly heard the Oscar Wilde quote. I suppose it's a quote. It's actually from one of his plays that goes along the lines of, "what is a cynic?" A man who knows the price of everything and the value of nothing. It's almost been so overused, we want to cover it today. Is it a cliché? Or, does it have any value to people in business and the pricing profession? I think it's only used because it's a well-known quote. It's only used to define a cynic because it's great. But it's kind of underused in the pricing profession. Yes, it does exemplify the difference between people who understand the value. And people who are passionately against the understanding of value. To the point, they're just not willing to even contemplate it. They're real personas here. I've met very cynical managers and executives in businesses who are just ardently just do not want to give up on cost-plus pricing. They say the bill is idle of everything and there couldn't be anything else that could replace it. Even bringing up a concept of value would be sort of pushed aside. Like almost something ridiculous to discuss in a meeting room. Even though everyone else can kind of see that there has to be more to life. Then just literally, the sum of the component parts of each different type of thing and cost. Then adding a markup to get money. It's just too simplistic for words. So this quote means it does mean a lot to the pricing people but I think it's not discussed enough. It highlights for me I don't think Oscar Wilde would appreciate other people changing the meaning of what he or what he wanted to say into something completely different. But I think it does differentiate. There is a massive difference in price and value. They're completely polar opposite things whether we want to call the person who sees that as a cynic or whatever else. On the flip side, of course, Oscar Wilde play was also a sentimentalist. It's the flip side of that coin. But you will see in companies where the company is very much focused as Joanna said on cost-plus or some other method. They will not invest in building the perceived value of the product. Increasing the value of the product, product innovation, those sort of aspects. They don't see the value that the product can offer and see as it is a marketing airy-fairy sort of nonsense. I work in companies. I'm sure many of you have where it's just dismissed. It's just dismissed by the old school accountant approach. And again I preach it was accounting so I'm not bashing that profession. But it's almost a negative side of that profession. Whereby people just dismiss the concept that value even exists or that value can help the prices increase. It's seen as either too complex or just fluffing mountains. When I look at that quote, "a man who knows the price of everything". In terms of the business, they see the product portfolio as literally just stock sitting there on the shelf that needs to be moved. It's very transactional everything. I'm sure a great accountant would know all the prices very well. Have them catalogued, recorded and can model them. Can do all of that stuff. Have all in the mind or all in Excel. They can just quote it but that's it, that's what as far as it goes. In terms of the last statement of the value of nothing, or a person that will just see it as a very transactional thing. They won't think about okay, why are people coming to the business to buy these products? What is the value of it? Why are people consuming? That's a question that a good pricing person will ask, and many accountants don't ask. Again, I'm not bashing accountants. It's not their area to ask. But at the same time, the good ones do. And it just opens a whole different realm, a different subject, a different discussion. That is much bigger and that's where you can find greater price premiums to drive profitability. If you just stick in this volume game. These are the stock we need to push out the door. You're limiting yourself and that value equation. Sometimes in many aspects of life, the truth can hide in plain sight. It can be so obvious that people can't see the wood for the trees, to use other literary expressions. We might start doing literary expressions or quotations on this podcast also. But sometimes it's so obvious to some people and so almost invisible to others. Even if you question stuff for a minute it becomes certainly clear that value can drive price. Say a wine business. You went to any wine shop or bottle shop and you're selecting a bottle of wine for a dinner party. There are very different products on those shelves. They might be in this same style of bottles. There may be the same ship, even the Label might be very similar. But the price from one versus another could be infinitely different. It's not just the tiers that people just talk about tiers. In an aspect, there are hundreds of differentiators. You look at champagne versus any other sparkling wine. You look at a cava, prosecco all these different things in all Australian sparkling wine. In many instances, champagne from the true shopping in France will sell at a premium. And it may not be that people purchasing the bottle prefer that flavour without tiers there could be other aspects too. It's been wine was more of a sensory thing. But obviously, this applies in pretty much every industry. Literally, when someone's denying it to that extent, they're not a cynic but they are being willfully blind to the truth. I was trying to think of it a different way. The cynic can be a great person to have on the team. That is if you've got a diverse mix of other personalities and opinions on the team as well. Because a cynic almost makes you passionately reject. Sometimes that unwillingness to push the frontier. And think about a different topic in a different way just through the way they perceive life and the fact that there can't be any alternatives. A good pricing person will always sort of think that okay we're up for debate now when a cynic comes along. What Oscar Wilde says here about a cynic, I think it's interesting. Because a cynic does provoke a lot of great conversation through their unwillingness to sort of debate. But they do change as well. I know a lot of great cynics have done great work with pricing once they've got that outlier moment about value. Thinking about the market in terms of, how people behave and respond to their business? Why do they value their business? Not even just the product when they see doing business with them as something greater than just the sum of its parts. It makes their life and their role in their own business as an executive more rewarding as well. That's when you start getting meaningful partnerships with your customers. I think we need pricers to be cynics. When we say that, we need them to have that skill set knowing the price and value are completely different. They need to question everything. They need to question, why the value should be this? What do we want it to be? Why the price is this? They need to be cynical. They can't just accept the status or whatever the company mantra.  Many companies have what used to call Yes man. I suppose the yes culture in the corporate is still very prominent as much as ever. To transform a business and to increase profitability, you need to question things. To question things, you need to be cynical about stuff. You need to question to tick the tiers and see if it stands up to scrutiny. That's it for me I think. I think a good cynic is a great scientist. I think we all know now that more scientific processes are coming to pricing. More data, more analytics, hypothesis testing, and a good cynic will impose the null hypothesis. Give you reasons to reject or accept our hypothesis and this is great. But we've got to have diversity on the team. Have that creative ability to construct alternative hypotheses that people hadn't thought about in the past. In terms of value, in terms of demand, in terms of what drives people, their behaviours, and their psychology. Because all of these things are related to the financial outcome businesses want to achieve. So yeah, I think I pretty much said all I wanna say. I think it's important to have that diversity. I think Oscar Wilde did say a great and very relevant quote from him about pricing, about life in general. Oscar Wilde is not one of those people if you've ever said we're short of words or short of opinions. It'd be very interesting to see how he would be coping in 2020. It'll be legacy what he would have to say about the current situation.