Services Pricing Around the World

Tipping, Pay by Minute Pricing and

Priceless
Pricing Approaches in services

Cost based pricing

Demand based
pricing

Competition
based pricing
 Cost based pricing: The price is determined by adding a profit
element in addition to the cost.

cost Profit price

Demand based pricing: It is a pricing method based on the

customer’s demand and the perceived value of the product.

Competition based pricing: This pricing method makes use of

competitor’s price as basis for setting a price.
Three key ways that services prices
are different for customers

1.Customer’s lack of knowledge of service prices

 Services variability
 Unwillingness or incapability of providers to
estimate prices
 Difficulties in collecting pricing information
 Prices are not clearly visible.
2. Non Monetary costs
Time costs :-
Time spent,
1. In service consumption
2. In waiting to receive the service
Search costs :-
Time, Effort, Energy spent in
1. Identifying service providers, Collecting information
2. Evaluating and selecting the service providers
Psychological costs :-
1. Fear of outcome, rejection, not understanding
2. Feeling of insecurity, what would others say

3.Price as an indicator of quality

 Unique Pricing

1)Pay by minute pricing

Pay based on minutes of service used.
Example: POPiN app

2) Tipping
A tip is defined as “a gift or a sum of money tendered for a
service performed or anticipated” (Webster, 2011)

3)Priceless

It is an extraordinary demand-oriented pricing policy.

It lets the customers pay whatever they thought the service was
worth of.
FOUR CUSTOMER DEFINITIONS OF VALUE

 VALUE IS LOW PRICE

 VALUE IS EVERYTHING I WANT IN A

SERVICE

 VALUE IS THE QUALITY THAT I GET FOR THE

PRICE THAT I PAY

 VALUE IS ALL THAT I GET FOR ALL THAT I

GIVE
PRICING STRATEGIES FOR THE FOUR VALUE DEFINITION

FOR VALUE AS LOW PRICE

• DISCOUNTING
• ODD PRICING
• PENETRATION PRICING
• SYNCHRO-PRICING

VALUE IS EVERYTHING I WANT IN A SERVICE

• PENETRATION PRICING
• SKIMMIMG PRICING
VALUE IS THE QUALITY THAT I GET FOR THE PRICE
THAT I PAY
• MARKET SEGMENTATION PRICING
• VALUE PRICING

VALUE IS ALL THAT I GET FOR ALL THAT I GIVE

• PRICE FRAMING
• PRICE BUNDLING
• COMPLEMENTARY PRICING
• RESULT- BASED PRICING
 Challenges Of Different Pricing
• Competition-based Pricing
1. Small firms may charge too little to be viable
2. Heterogeneity to services limit to comparability
3. Prices may not reflect customer value

• Cost-based Pricing
1. Costs are difficult to trace
2. Labour is more difficult to price than materials
3. Costs may not equal the value that customers perceive the services are
worth

• Demand-based Pricing
1. Monetary prices must be adjusted to reflect the value of
nonmonetary cost
2. Information on service costs is less available to customers; hence,
price may not be a central factor
Thank You