The Pros and Cons of Cost-Based Pricing & Other Pricing Strategies Business-class tickets offer significant value for a segment of customers-added comfort, early-boarding, meal service, arriving at destination well-rested (perceived as especially valuable on long-flights)-and airlines price these tickets accordingly.Ĭontact Us To Learn More About Pricing Strategies! This pricing strategy seeks to estimate the determined “value” of a good or service based on the buyer’s point of view and then price based on that perceived value.Ī prime example of value-based pricing is business-class airline tickets. Value-based pricing is the final approach and usually the most difficult to execute. What is a Value-Based Pricing Strategy Example: Another typical example of market-based pricing is companies whose pricing strategy is to be “fast-followers.” A fast-follower is a company that adjusts their prices shortly after their competitors change their prices (quickly following suit, aka fast-following).ģ. For example, commodities (raw materials, basic resources, agricultural, or mining products, such as iron ore, sugar, or grains like rice and wheat) often fall in this category as pricing is defined by what the market is willing to pay. Market-based pricing is when the price of a product or service is set based on its competitive market position and product market fit-essentially pricing on par with or near your competition. Unlike cost-based pricing, market-based pricing takes into account competitors. What is a Market-Based Pricing Strategy Example: For example, if it costs $2.50 to make a widget, then a 50% standard margin would mean the widget’s price is $5.00.Ģ. What is cost-based or cost-plus pricing? Surprisingly, cost-based pricing is what it sounds like: calculating the cost of a product or service and adding a standard margin to the cost. What is a Cost-Based or Cost-Plus Pricing Strategy Example: While there are claims of other strategies, most are offshoots or variations of these three.ġ. When it comes to pricing anything (B2B, B2C, product or service), there are three key strategies to achieve price optimization:
There are three common pricing strategies and pricing models typically employed when setting a price. Working in the field of pricing and revenue management, one of the most common questions I get is, “Where should I set my price?” Although it might seem like a relatively straight forward question, the underlying answer is anything but.
0 kommentar(er)
