Your Guide to the Most Popular Business Pricing Models

//Your Guide to the Most Popular Business Pricing Models

Your Guide to the Most Popular Business Pricing Models

Starting a business today is easier than ever. The entry threshold is low and the business operation cost is almost zero. Due to the emergence of communication channels and lean software development processes, choosing a pricing model is more like day-to-day work than serious work. Most employers simply choose the pricing model they like and move on. Because you can change the price by clicking the button, you don’t have to spend hours worrying about the price.

This is the essence of the current market. Companies are not afraid to try different pricing models because they know they are becoming more agile. With many price models to choose from, business owners can make quick decisions and then repeat them based on customer feedback.

Of course, these pricing methods are only applicable to online businesses. Retailers with real products must make pricing decisions through data and market research.

This article aims to explore the most widely used commercial pricing model.

The most widely used commercial pricing model:

Cost-based pricing

This is one of the most basic pricing models. Cost-based pricing is based on the concept of margin. You decide the profit you need and provide the margin you want. Then add the margin to the cost of the product or service. Cost-based pricing has been used for many years as a simple and effective model for achieving significant profits. However, the main disadvantage of this pricing model is that it does not address the direction of the margin calculation method.

Competitive price

Competitors often decide how they do business. We investigate the price of competitors based on a competitive pricing model and then set prices based on the results of the study. The final price may be similar to the price of the competitor, or it may be lower or higher depending on where you want it. But this means a competitive price, considering what the competitor is doing, regardless of price.

Brand-based pricing

Brand price is based on the perceived value of the product rather than external factors such as actual production costs or competitive prices. Luxury brands often adopt this strategy and must deliver valuable images to consumers. When customers see higher prices, they want to build a certain image in their minds and improve their social status.

Rate-based pricing

This pricing model is primarily used by service providers such as writers, designers, and coaches. When you sign a contract, the service provider charges the amount of hours based on the value of the customer’s time spent tracking, and then the cost of one hour multiplies. Pricing with no fees is very cost-effective, but there is not a single vendor providing a lot of security for the customer’s guaranteed workload.

Project-based pricing

This is the ideal pricing model for projects with clear boundaries. Project-based pricing means multiplying the hourly rate by estimating how long the project takes. Project-based pricing is never 100% accurate, but it can benefit paying customers and suppliers, depending on the project.

Value-based pricing

Value-based pricing is similar to brand pricing. Brand-based pricing allows customers to determine prices based on how customers understand their brand. Using value-based pricing, we already know how to set the price based on whether the customer is willing to pay for the product.

Stratified price

Many software brands use tiered pricing. You can choose from limited edition products and integrated solutions. There may be some pricing packages. For example, a standard feature of the package price is $39, including all features of the Marketing Automation Premium Pack $119, and integrated enterprise solutions – US $ 297

Pay to learn

This pricing model is typically used for museums and personal blogs. The Pay-What-You-Want model customer decides what price to pay. This is a very useful pricing model if you don’t understand pricing and want to collect final pricing data. Pay-What-Want-Want pricing is also effective for organizations with social responsibility.

Free service paid service (free value added)

This pricing model has become increasingly popular in recent years as the company has found a way for customers to continue to pay for products after they have been shipped. Open source software is usually free, but the company receives support and custom development services.

Pricing changes over time

The term-based pricing model used by most airlines is significantly better than other pricing models because companies can change prices based on demand. Changes can be made throughout the year before the service is available (faster at the time of purchase) or at a level of interest to the product throughout the year.

Volume based pricing

The quantity-based pricing model typically offered by print suppliers means that positive or negative changes in pricing will contribute to the order volume. For example, you can enjoy a 15% discount on more than 500 orders and a 20% discount on more than 1000 units. Bulk sales discounts for printers are very popular because customers sometimes waste extra material when placing small orders. In this case, it is easier for the printer to offer discounts than to allow waste.

Shaver and blade model

This pricing model is used for actual products. Usually you will pay a small fee for the product, but you will need to purchase the replacement parts needed to run the product correctly. This pricing model is often used by inkjet printer brands. With razor blades and blade models, you need to make sure that the initial offer is enough to appeal to people. I hope people will understand that buying original components is essential.

Monthly subscription fee

The price model changes with the creation of new products and the constant innovation of people. Lyft recently launched a new monthly subscription program. Passengers can get up to 30 tickets in Lyft’s $199 monthly subscription program. This pricing model is a mix of software subscription pricing models (hierarchical pricing) and quantity-based pricing, and is used to replace a certain number of functions to obtain a certain number of similar services.

Conclusion

This is an overview of the most popular pricing models, but not all of them apply to your business. Some pricing strategies apply only to software products and models that only apply to actual products. However, you can find a model that appeals to your customers, and through a fair investigation and in-depth knowledge of the product, this can have a positive impact on your bottom line.

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By | 2019-01-31T17:03:58+04:00 February 17th, 2019|Categories: Bitrix24|Tags: |0 Comments

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