TapRun Consulting

The Pricing Newsletter

June 2018 issue

Hello Pricers,

Summer is just around the corner! While everyone else is thinking about surf, sun, and drinks with little umbrellas in them, wouldn't it be fun to dust off your corporate strategy and rethink the way you're approaching your business?


Well you should probably do it anyway.

Pricing Question from a Reader

Today's question comes from reader P. J.

My company is selling a product that has a defect known to us. Is it ethical to avoid revealing the problem to our customers?

The question you're asking is an important one and makes me wonder about a great many things - not the least of which is why you're asking an economist like me for ethical advice.

Nevertheless, what a company reveals about its offerings can have a tremendous effect upon its pricing power. For that reason, I'm happy to take a crack at your question.

Disclaimer: I am not a lawyer, nothing herein constitutes legal advice, and, as usual: please don't sue me. If your defect could result in legal action, I would strongly suggest that you consult with a lawyer immediately.

Issues of litigation aside, should one operate under the "caveat emptor" (let the buyer beware) methodology and just hope for the best? Or would it be prudent to be completely honest?

As always, it depends.

I've come up with six factors that you should probably consider when thinking about your product's defect. Other variables may come into play, depending upon the particulars of your unique situation, but this list should prove useful as a starting point for your deliberations.

It can be difficult to know exactly where to draw the line when it comes to honesty about defects, but hopefully this list will prove useful as you arrive at your final decision.

Questions come from readers like you. If you'd like your questions answered, send them my way.

Pricing in the News

From the Blog Archives

Notable Pricing Quote

"What you have become is the price you paid to get what you used to want." -- Mignon McLaughlin

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