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Living -- and dying -- by market share

Matt Johnson, managing director of Simon-Kucher & Partners' Mountain View, Calif., office, discussed the right way to think about pricing in a recent interview with Computerworld's Gary Anthes.

In general, should you price a product or service based on its cost to you or its value to the customer? Cost should be a factor, a floor. But your target price should be based on customer segmentation and the value you are delivering.

So why do so many companies just do cost-plus pricing? Pricing based on value is harder. Traditionally, companies could track revenues and costs, so looking at those numbers was easiest.