Chief Pricing Officer

When Albert Einstein died, he met three economists in the queue outside the Pearly Gates. To pass the time, he asked what were their IQs. The first economist replied 190. “Wonderful,” exclaimed Einstein. “We can discuss the statistical variations of Ernest Rutherford’s analysis of atomic physics and my theory of general relativity”. The second economist answered 150. “Good,” said Einstein. “I look forward to discussing the role of demand shaping in setting prices for manufacturing industries.”  The third economist mumbled 50. Einstein paused, and then asked, “So what is your forecast for the budget deficit next year?” (Adapted from Economist June 13th 1992, p. 71).

Happy New Year Everyone!

Rip Gerber

Chief Pricing Officer

In the price optimization industry, the term “econometrics” is often used to describe the application of economics (namely mathematical and statistical techniques) in the study of problems and the relationships among data. The first known use of the term “econometrics” was by Pawel Ciompa in 1910, but Ragnar Frisch is given credit for coining the term in the sense that it is used today.^[2] An econometrician (say that three times fast) is someone who studies and applies econometrics. If you ever bump into an econometrician standing in line at the airport sitting next you at the bar, here’s one to pass the time:

Three econometricians went out deer hunting and came across a large buck. The first econometrician fired, but missed by a meter to the left. Then the second econometrician fired, but also missed, this time by a meter to the right. So the third econometrician simply put down his gun and shouted in triumph: “We hit it!  We hit it!”

Here’s one more reason for putting science-based software in your pricing process.  Next time you’re renegotiating contract prices, pull this one out.  - Rip

The CEO of a large manufacturer posted a job for a new Vice President of Pricing.  The HR department screened hundreds of resumes and presented three finalists: a mathematician, an accountant and an economist.

So the CEO calls in the mathematician and asks: “What do two plus two equal?” The mathematician replies “Four.”  The CEO asks: “Four, exactly?” The mathematician looks at the CEO incredulously and says “Yes, four, exactly.”

Then the CEO calls in the accountant and asks the same question “What do two plus two equal?” The accountant says “On average, four - give or take ten percent, but on average, four.”

Then the CEO calls in the economist and poses the same question “What do two plus two equal?” The economist gets up, locks the door, closes the shade, sits down next to the CEO and whispers: “What do you want it to equal?”