‘[And this is] the rationale and the motivation for the book. It’s about, well, how do we spread this? How do we do some good with it? How do we improve the economy? How do we make businesses more effective?’
David Falzani has spent decades building and growing businesses, and now, as a Professor of Practice, helping others to do the same. And throughout that time he’s watched entrepreneurs grapple with one constant, intractable, mysterious issue: pricing.
It’s not just about numbers. (In fact it’s not really about numbers at all.) The price we put on something, the price we’re prepared to pay for anything, is wrapped up in emotion and our deepest most irrational cognitive processes. Understanding that and getting your pricing right is all too often the difference between thriving and failing as a business, which is why David wrote his Business Book Award winner, ‘Double Your Price’.
If better pricing leads to better business, David is equally clear that smarter writing leads to more satisfied readers. (Or at the very least, fewer rewrites.) And he has some good tips to help you with that, too.
David on LinkedIn: https://www.linkedin.com/in/davidfalzani/
Alison on LinkedIn: https://www.linkedin.com/in/the-alison-jones/
The 10-day Business Book Proposal Challenge GIFT EDITION: https://pi-q.learnworlds.com/course/proposal-challenge-gift-24
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Alison Jones: I’m here today with Professor David Falzani MBE, who is a serial entrepreneur, business consultant, and non-executive director. A Professor at Nottingham University Business School he’s published more than 90 articles and blogs, as well as his book, Double Your Price.
Here it is, look, right by me, published by FT Publishing in May 2023, he’s got it too, which won Sales and Marketing Business Book of the Year at the Business Book Awards 2024.
So firstly, congratulations, David. How does it feel?
David Falzani: Thank you very much, Alison. Yes, it feels tremendous. Yes, it was a wonderful experience to go through. Complete shock and surprise, of course, to actually be the winner. I was delighted to be shortlisted into the final six. So, it was a fantastic experience. I shall never forget it. And it’s been great to hear all the feedback from the new readers and the new people exposed to the book as a result of the award.
So it’s been great.
Alison Jones: And that’s such a good point, isn’t it? Because I mean, it’s lovely winning awards. I mean, you know, we could do it all day long. A lovely feeling, but more importantly, it just makes people who weren’t aware of the book, aware of the book. And it gives you that sort of stamp of, well, it’s definitely worth reading because somebody independent has said so, rather than just you and the publisher.
David Falzani: Yes, absolutely. Any help to spread the word, I think, you know, it’s obviously a very crowded, noisy world out there with lots and lots of messages being crisscrossed. So anything that helps differentiate yourself, anything that shows that you’ve received a mark of approval, I think is very helpful as an author in trying to not just sell books, of course, but actually spread your message.
So, you know, I’m very keen to…
Alison Jones: …yes…
David Falzani: …Rather than just spread the word, basically. So it’s all part of the good news story.
Alison Jones: And that point about differentiation, we may well come on to that. But I wonder, what was the genesis of the book, David? Why did you start writing it? What did you want it to achieve?
David Falzani: It was very much linked, I think, to my business experience. So as you kindly highlighted, I’ve spent the last 25 years or so essentially building and growing businesses, either businesses I’ve started myself, so I started five or six companies, or businesses that I’ve been a stakeholder or investor into, and I’ve sort of 15 or 16 of those. Or more broadly in the latter part of that sort of 25 year period, the training I’ve done and mentoring with young businesses. I’ve trained I think over six or seven hundred businesses through the Goldman Sachs 10,000 program at Oxford University Business School, Saïd Business School, and also a similar program in the Royal Academy of Engineering.
So I’ve had sort of 15 years I suppose of dealing with and working with young entrepreneurs, or older entrepreneurs for that matter, but people who want to grow their businesses. And I noticed a couple of trends, and one of the trends I noticed was that people had a real hang up about pricing. People could not really, you know, truck successfully with this idea about what pricing is, or what it should be, what the methodologies should be.
And it’s like a big scary beast to many people, and they sort of do it once and then they’re frightened to revisit it, or they just kind of ignore it and just, you know, do a very sort of cursory piece of work to set their prices. And I noticed that through many businesses that I worked with, either as a consultant, or as I say, as a trainer or mentor.
And I felt, well, look, there’s something here, David, that you can develop and use in your training. And I did that and I delivered it to various companies and various programs. And I was just blown away and surprised by the strong response I had on this issue of pricing. You know, I did general sales training and how to scale and grow your business. You know, reflecting again, all my experiences.
But then the price part in particular just got a really strong response. People were truly sort of shocked and amazed, particularly around the sort of psychology and the more emotional aspects of value recognition within their value proposition. So I thought, okay, I’ve now got something that seems to be really useful and people really profit from it, from a business point of view, how can I spread that word more broadly? And a book seemed to be the obvious and you know, the next step.
Alison Jones: Yes, absolutely. And it’s so interesting that you say that. I think I’m not at all surprised actually that you had that response to it. I think you’re right. It is the perennial issue and it’s not… so there’s technical aspects and I loved, it made me laugh. You said that the book could also have been titled The End of Cost Plus Pricing or something.
So I’d love to get into the technical aspects of how, well, how do you price if it’s not cost plus? But also that, yes, oh my goodness, the emotional load of that, because what you’re basically saying is, this is what I’m worth. And that feels, oh, it’s so vulnerable. And, you know, nobody likes a show off and, you know, all the kind of scripts that are running through our head about the insecurity and everything, so, let’s take that first.
Tell us about the emotional aspects of the psychology of pricing, if you like.
David Falzani: Yes, I think there’s a very strong cognitive bias at play when people think about pricing, you know, as individuals, as human beings, we are all consumers and we tend to think ourselves as being very rational, you know, consumers. We make considered decisions.
Alison Jones: Surely that’s been debunked.
David Falzani: Value for money. And, you know, and you’re quite right, of course.
But if we went out to the general population, probably many of them would still believe that they are actually in control of their own destiny and decision making. But of course we know, don’t we, as marketers and as people who’ve read business literature you know, things like Daniel Kahneman you know, Thinking Fast and Slow. System one, system two.
We know that actually the opposite is true. And we’re actually driven by often hidden processes in sort of historically sort of hidden parts of our brain. And as marketers, many companies leverage that and use that to their benefit, but also as entrepreneurs, if we’re not aware of that, then I think we display those biases in making poor decisions about our own business decisions. And pricing is one of those because it’s particularly loaded, as you said.
So I think the psychology is really on two sides. One is on the entrepreneur side. How can we think with better clarity? How can we be aware of the cognitive biases that we might have in order to be more rational and more considered in our decision making, business decision making in particular? But then also because we think we’re rational, we think our customers and consumers might be rational, and actually all the evidence shows that they’re not.
So let’s think much more dynamically about price. Let’s actually think about, well, how can I actually build much more value in the eyes of my customer base? You know, consumers in B2C, but also buyers in B2B, because ultimately they’re human as well. And they’re in a more structured buying environment perhaps in B2B but nonetheless they’re still emotional animals fundamentally.
So when you start to think about that psychology side, you start to think, well, things like priming, things like the magic of the middle, you know: I always like to use things like restaurants as easy kind of everyday examples for people to understand how restaurants price, why the wine list has the breadth of prices from the cheapest bottle to the most expensive, their roles in anchoring decision making, and all these sort of interesting things to do with the psychology.
And you know, I’m sure you saw my various wine stories in the book, but you know, the Paris wine tasting of 1976, and also the brain scans of people being given wine to taste. So blind wine tasting done in an MRI machine and looking at the brain responses whilst they tried these different wines.
It’s just fascinating to see how irrational we are, despite us thinking the opposite.
Alison Jones: Yes, and that point about giving people a range of prices so that they can find their level of comfort as much as anything, I just think is absolutely fascinating. And it makes complete sense. The cost plus thing makes absolute sense to you because you know the cost, but the consumer doesn’t know the cost. The consumer only knows the perceived value and the return that they expect to get on that.
David Falzani: Yes, CostPlus is deeply reassuring, isn’t it, for most businesses because you know your costs. They’re measurable, they’re tangible, because you have all the information you require on your computer, in your systems, in your factory or workshop or office. But of course, it’s completely the wrong approach because it’s entirely introspective.
It doesn’t take into account the thing we should be thinking about, which is our customer, and that’s on the outside. So if we now start thinking about customer value based pricing and customer value generation, Which is not the same as value for money, of course, but increasing customer value that we need to understand our customer. We need to do research. We need to run experiments in the marketplace.
And these all take a lot more energy and commitment and time perhaps than just looking at our historical, you know, internal management accounts. So very, very easy and fundamentally, you know, a little bit lazy perhaps to use cost plus but more importantly, completely inappropriate because it just ignores the customer. And then, you know, I’m fond of saying to my students at Nottingham in general, the more we understand our customers, the more successful we are in business. And that’s true for pricing as well. So value based pricing, outward looking, looking absolutely at the competitive landscape as well.
But looking at values for our customers, not introspective.
Alison Jones: And it’s interesting, the book, how you trace the evolution of pricing, the new models that have come out and the way that supermarkets, for example, are, you know, are changing the rules. I mean, I guess, give us one or two examples of how pricing is changing, the direction you see it going.
David Falzani: I think there is a lot happening. Well, I think there’s a couple of reasons why there are changes. I think partly culturally, there’s been a shift where we’ve become increasingly attuned and, if you will, slightly cynical perhaps, use the word programmed by media and by marketers to accept and expect certain types of messaging. And that’s influenced, I think, the way that we recognize value and associated pricing with that.
So I think there’s been a shift in the way that we sort of frame rationality and the way we make decisions. Particularly as consumers, I think that the bottom line is that people tend to buy the thing that appeals to them the most at a price that they can inwardly justify. So it’s not at all a rational decision. And I think much of that has been set up for us over the last certainly 25 to 40 years through advertising and through our consumption of those sort of messages. So I think that evolution will continue.
I think the second change that’s happened and will continue to happen is around the speed of that change can be now managed, given that everyone, well not everyone, but in Western economies, we’re in an interconnected world where data and pricing can be live.
So airlines and different types of organizations can price almost minute to minute. They have live information about their business commitments, how many people have bought, how many people have signed up. We can now manage sales pipelines. So if we think about a virtual shoot, perhaps, or a pipeline where we have prospects who are visiting our website or interacting with us in various ways in social media, and then they go down a pipeline where at the end of that pipeline, end of that process, they become customers. That information is increasingly becoming transparent.
So companies and marketers can also see that. And pricing again has a factor there in terms of how do we segment that pipeline? There will be some people in there who are price sensitive, so we need to have an offering that’s appropriate for them.
But if we set all of our prices at that level for people who are basically price shopping, then of course we’ll miss all the upside that’s available with all the other segments of customers. So now we can do all this live, we can understand the different segments, we know there are people who would want to pay more, given a value added opportunity to do so.
So if we can give them those opportunities, if we can help them to self identify themselves to us through these interactions, again it’s all live today, then we have a much more sophisticated view. And I think that’s what medium and larger companies are starting to do, have a much more sophisticated dynamic view of pricing, again powered by the live information.
Alison Jones: It’s so data based, it’s so fascinating, so responsive. And as a publisher, it feels like a different world. It’s so interesting. Books are one of the few things that sort of the idea of, well, pricing really has passed by completely. They haven’t really gone up in 20 years. It’s so interesting, that perception of value, isn’t it?
David Falzani: Yes, absolutely. And, but you know, we’ve had innovation in the book space, of course, haven’t we? We’ve had the eBooks, we’ve had the Kindles, we’ve had audio books, spoken word. And so it is evolving. It’ll be interesting to see what happens over the next few years with AI and so on. And whether that again, gives us another step change either in the market or in the production side of things.
But Yes. Yes, I think it’s, you know, I mean, whenever I…
Alison Jones: locked low.
David Falzani: …you know, whenever I meet book fans, people who, they’ll see a new book and they’ll hold it and say, it’s a book, you know, it’s a magical thing in its own right.
And maybe that’s an age thing, a generational thing, but I think there are still plenty of people who feel that way about printed matter. And I think more broadly, you know, the research has shown that printed materials, particularly for young minds, so for children and teenagers, people who are developing, has a greater word rarity and breadth of vocabulary compared to online media, which is usually on a much smaller screen and of course has to be consumed in seconds rather than minutes or hours.
And so we very much, I think, have a safe place in the world. Yes,
Alison Jones: I certainly hope so, but I’d love to talk to you about the writing side of it as well. So we talked, we touched on the value of reading there for the customer, but what does, I mean, as an academic, you have to write, it’s sort of write or die, isn’t it? You’ve got to publish. There’s a sort of imperative on that.
But, just for yourself, what does writing look like for you and why do you do it and what do you get out of it?
David Falzani: So I’m a Professor of Practice, so I’m very much a practitioner. So my writing is very much around a process whereby I’m trying to capture and maybe codify either interesting theories that I’ve come across and maybe knit them together in some new way or my own experiences or my live experiences I’m having with businesses that I’m working with, you know, from day to day, week to week.
So that, if you like, is the raw materials I use, rather than pure academic research, which is not something I particularly engage with. Again, Professor of Practice. However it’s a great question because what I do is I find I’m inspired when I find some new combination or some perhaps slightly less populous or understood facet of business that I think would be really interesting to share is to incorporate that within, you know, blogs, articles, maybe collaborate with my research colleagues to come up with a new piece of real research to try to popularize and spread the word essentially.
And so kind of similar really to the rationale and the motivation for the book. It’s about, well, how do we spread this? How do we do some good with it? How do we improve the economy? How do we make businesses more effective? If we make businesses more effective, then they can delight their customers more as well. And there’s that reinforcing cycle, isn’t there?
So for me, I find writing deeply satisfying. I find it’s best done from a quiet place. That doesn’t necessarily mean physically quiet, but having that sort of internal sense of calm, I suppose, where you know, I think academics and academia, actually, I think we’re sometimes accused of being, you know, too close to the heavens, you know, we’re very theoretical, theory is very reassuring, very clean, and the real world is actually very messy and very much the opposite to that.
But I think if we can find that sort of you know, those interesting materials and messages, we can bind them together in some new or interesting way and then put it forward to our readership, then I think we do something very valuable. You know, inspire, we guide and then hopefully they go off and perhaps find more practical, you know, workshops or training or they run experiments based on the things that we write about.
So certainly that’s one of my drivers.
Alison Jones: It makes me, Professor of Practice is, by the way, such a lovely phrase. I love that because Professor evokes theory, abstraction, as you say, and sort of ideas, and practice is all about rolling your sleeves up and, you know, what actually works in the real world. And the way you speak then, it gives me almost an image of writing as a sort of bridge between those two. A sort of two-way bridge, because something happens in the real world and then you kind of sit down, you write about it, and you abstract an idea from that, and then how do you take that in a way that you can communicate it so people can use it in their day to day reality.
That’s quite an, it’s a lovely image of how writing can work, isn’t it, in business.
David Falzani: Yes, absolutely. Yes, you hit the nail on the head. It’s exactly that. And when I became a Professor of Practice it must be some, I’ve been working with Nottingham University, I think in one way or another, I think, some 14 years, I think I was a honorary Professor or a visiting Professor, I think 14 years ago, but I’ve been a full Professor there, I think now for five or six years.
And one of the challenges that I was set when I joined that organization was as a Prof of Practice, David, how can you add value to all of the stakeholders there, including your research based colleagues, including your, you know, the sort of the junior research based academics coming up through the ranks, but also other Profs of Practice. And of course, let’s not forget the students and the exec ed. participants as well.
And that was an interesting question. Well, absolutely. But, you know and I’m very much teaching focused and I think the students and the student experience is so important. So I’m very pleased to bring something different to the table, let’s say, through that Prof of Practice role.
Alison Jones: That’s so interesting. And I’m not going to, because I want to ask you about writing, but I’d love to, maybe that’s a different podcast, just to talk about the kind of, the different roles within academia and how those relate to the real world, and also how, as you say, your interaction with the more research driven work lends, well, not just, I mean, the whole kind of research evaluation framework is also based around impact in the real world, isn’t it? So I imagine there’s a really, really valuable role there for demonstrating, you know, the value of this in the real world.
But anyway, back to the writing. I always ask my guests for their one best tip. So if somebody who, let’s face it, is unlikely to be a Professor at a business school, but they do have some good ideas about writing and about writing a business book, what should they know before they start?
What’s your one best tip for them?
David Falzani: I mean, based on my experience and you know, of course I have to hold my hand up and say there are people who of course have much more experience, but based on my experience, my number one tip would be to start talking to publishers early and keep at it. It will take far longer than you probably think it will.
Alison Jones: Longer than it should, frankly.
David Falzani: And engage with the publisher before you start to commit a lot of words to paper or text, you know, before you start writing a lot. Because A, finding that publisher might take longer than you think. Secondly the publisher may want a slightly different book from you, and then you have to go back and rework your materials. And thirdly, and perhaps most importantly, the publisher should be able to give you some really good advice and guidance to help you shape your idea. And again, if you don’t have that and you’ve already written 50,000 words or whatever it might be, then you have to go back and rework it all. And I think that’s actually harder than writing the original book.
So I would say, you know, start early, start with publishers, ask for feedback on your idea. And if you can get good editorial support from a publisher, I think that’s very valuable to help you shape your output, essentially.
Alison Jones: And of course you work with Pearson, you work with Eloise there, who’s terrific at this, really supportive of her authors. Yes, brilliant. And when you say approach them, you’re talking about a proposal here, right?
David Falzani: Yes and I spent, I think, six months to a year to find Eloise, FT Publishing and Pearson Publishing. So I approached different, so I did some research. I looked at all my favorite business books. I looked at who had published those. Looked at where they’ve originated, and I thought, well, if they’ve published books I really like, then I should approach those publishing houses.
And it’s surprisingly hard to do that, because many, particularly in the UK, don’t seem to be very open to receiving proposals from authors. So I was delighted when I found Eloise and Pearson. And went down that process, but it can take a lot of time. And, you know, I tried agents and again, I think in business books and we know it’s not a huge market in this country, it’s not like the USA, which I understand to be far, far broader and larger business book readership and market than it is in the UK.
So it’s not a huge market, so you have to, you know, really work hard to find the important people to approach or the most appropriate contacts and just work at it until you can find some, you know, develop some conversations essentially.
Alison Jones: Yes, absolutely. And actually there’s another podcast episode. Why are business books not a bigger market in the UK, given that we are a nation of entrepreneurs?
David Falzani: It’s very frustrating, isn’t it? I mean, it’s just, you know, I go in and out of airports in the USA and every airport’s got a whole wall, you know, a whole panel dedicated to business books, and they’re all bestsellers and they’re all fantastic. And I go to WH Smith or whichever news agent is at the airport out of Heathrow or Manchester or wherever I am.
And there’s not a single business book in the whole place. So you think, oh, why is that? But anyway, you’re right. It’s a different subject.
Alison Jones: Yes, it’s different, but it’s one close to my heart, I can tell you. Brilliant. So thank you for that tip.
I also always ask my guests for a recommendation, so you’re not allowed to recommend Double Your Price, but though I do, but you’re not allowed to, what book would you recommend?
No, not that one.
David Falzani: I think it’s a difficult one. I mean, the book that I always remember and it perhaps been the most useful book to me in the work that I do as an entrepreneur and also the work I do as a trainer has been Blue Ocean Strategy. Now that was published a few years ago and it’s extremely, was extremely popular and probably is still today.
So I’m not sure if that’s particularly valuable suggestion to make Alison, whether…
Alison Jones: Oh, I think it is. It’s such a classic and it’s also, it’s one of those books that’s gone on to create a sort of shorthand for a way of thinking, which is, I think one of the great gifts of good business books is they give us language for stuff that we sort of knew, but couldn’t quite express well.
And they give us a shared language for it.
David Falzani: Yes, absolutely. The idea of blue ocean, red ocean, you know, I think these are ideas that I use almost every week in the work I do. And again, I think it probably fed into my own thinking about value proposition when I came to write down my thoughts about pricing as well. Because ultimately, you know, we want to get away from red oceans where everyone is competing on price, price, price, price.
You know, there’s sort of blood in the water, all the competitors. It’s so fierce, they’re trying to kill each other. And we want to either create or discover blue oceans where we can clearly articulate and differentiate ourselves through a very powerful value proposition. So that we can have, you know, good margins, good profits, and we can reinvest that back into businesses and pay our staff better, train them better, put more money into research and development, get a better product.
And again, that’s a self reinforcing cycle and that’s a real theme of my book. And I think I have to you know, again, sort of give some credit to Blue Ocean Strategy. And how that really helped the idea about, you can control to a certain extent, the value proposition that you have and that you develop decisions you make within your business.
If you do that correctly, then a lot of things become easier and not least having a premium price that then allows you to earn a decent living and reinvest in all those valuable ways.
Alison Jones: Yes and actually when you put it like that, it sounds, back to the beginning of this conversation really, you know, the psychology of that, the understanding that this is the right thing to do for all these sorts of reasons, that it’s not just you raising your prices because you’re having a go. It’s actually, you know, this has got to be a sustainable business.
It’s got to reflect the value. It’s got to be able to pay your staff, all that really, really good stuff.
David Falzani: Yes, absolutely. I mean, I always like to think the key messages from my book were really twofold. One was a shift away from example, cost plus towards value based pricing. So how do you create and design your value proposition so that it’s really something which stands out and differentiates yourself in ways that are valuable to your target audience.
And then the second thing is if you do that successfully, that you can charge a fair price. Not competing on price, but charge a fair price, which allows you to reinvest back into your business and get that circular model of growth and improvement to make better products, better services, better staff training.
You can look after your staff better. That means your customers are happier and then you go…
Alison Jones: …a better product.
David Falzani: Yes. And, you know, Lord Sainsbury very kindly wrote the foreword to my book, and in that he calls that a race to the top, rather than what some businesses do, which is a race towards the bottom, you know, trying to compete with low cost countries or low cost competitors.
Much better to have a race to the top where you’re adding value to your products. Maybe it’s tangible value, maybe it’s intangible value. And again, I talk in the book about how you can add value through emotional factors that are not, you know, apparent, not immediately obvious, I give the example about, you know, table water, a very sort of mundane thing, but how that H2O molecule is being sold at a 600 percent different price, a six fold higher price, because of just the packaging and the messaging that goes with it. It’s the same molecule, but the emotional value attached by the branding, the messaging that goes with that, and the only physical representation is in the packaging, but really it’s about the emotional package or delivery.
And that’s really where the value comes from. So if we can do that with our own products, think about the emotional value. It may or may not make tangible changes, but it certainly adds value and makes the lives better for our customers.
Alison Jones: Yes, and thank you for that summary. That’s really helpful actually for anybody who hasn’t read it. It is a terrific book and congratulations on the win and thank you for your time today. Now, if people want to find out more about you, more about the book, where should they go?
David Falzani: One of the fortunate things about my surname in the internet age is that I’m very easy to find because there aren’t many Falzanis around. So please just Google me, find me on LinkedIn. I do a variety of things, including help chair a charity. Please look me up, I’m fairly easy to find.
Nottingham University website as well. Feel free to drop me a line if there’s anything that you would like to ask me about.
Alison Jones: I’m rolling my eyes because as a Jones, I find this incredibly irritating, but yes, great, good for you. Really happy for you. Marvelous.
Right. Thank you again for your time today. It’s been really, really fun talking to you and congratulations again.
David Falzani: Pleasure. No, thank you very much, Alison. A real pleasure.
