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4. Service Pricing, Pricing Strategy - Coggle Diagram
4. Service Pricing
Objectives
Gain Profit
Cover Cost
Build Demand
Develop a User Base
Support Positioning Strategy
Support Competitive Strategy
ways that service prices are different for customers
Customer Often lack knowledge of Service Prices
Role of Non-monetary Price
Price is a key signal of quality
Role of Pricing in Services
Forming expectations
Making purchase decisions
Evaluating service quality
Controlling demand
Approaches to pricing Services
COST-BASED PRICING
Costs difficult to trace
Labor more difficult to price than materials
Costs may not equal value
COMPETITION-BASED PRICING
Small firms may charge too little to be viable
Heterogeneity of services limits comparability
Prices may not reflect customer value
DEMAND-BASED PRICING
Monetary price must be adjusted to reflect the value of non-monetary costs .
Information on service costs less available to customers, hence price may not be a central factor
Value Based Pricing / Four Customer Definitions of Value
“Value is Low Price”
Discounting
Odd Pricing
Synchro-pricing
Penetration Pricing
“Value is Everything I Want in a Service”
Prestige Pricing
Skimming Pricing
“Value is the Quality I Get for the Price I Pay”
Value Pricing
Market Segmentation
“Value is All that I Get for All that I Give”
Price Framing
Price Bundling
Complementary Pricing
Results-based Pricing
Reducing Related Cost
Monetary
cost in searching for purchasing and using
Non-Monetary
Time
Physical
Psychological
Sensory
Characteristics of service pricing
Pricing of services is complicated
Service organization use different terms to describe the prices they set.
Consumers often find service pricing difficult to understand & risky
Pricing Strategy
Competition
Value to Customer
Cost