Pricing Power (pt. 2) - Intellectual Property
February 7, 2019·0 comments·In Brief
The skinny of "Pricing Power #1 - Client Ownership" is that pricing power in a services industry is found in your proximity to the client relationship, not the product that the client is buying. The problem, of course, is that it's really really hard to scale client relationships, or at least it's hard to scale the relationships that are worth scaling.
The skinny of "Pricing Power #2 - Intellectual Property" is something of the reverse. If you ARE on the product side of your industry, then the only way to maintain pricing power is through narrative-rich if not mythic intellectual property. Conversely, relationship owners always think that they can scale their nice little businesses with technology and IP. They are always wrong. With one exception, which I'll hold off for a big reveal at the end.
IP is useful in preserving pricing power on the product side of financial services in the same way that giant castle walls are useful in preserving medieval power in a Monty Python movie. I suppose that's pretty obvious. If you own something special that others can't legally own, too, then you can charge more for it, or at least keep others from undercutting your price by offering a similar but less special product. But I'm saying something beyond that.
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