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| Name | Services Pricing - 3 methods and 8 Types of Service Pricing |
| Video Uploader | Video From Marketing91 |
| Upload Date | This Video Uploaded At 05-11-2022 05:30:05 |
| Video Discription | View all our courses and get certified on https://academy.marketing91.com Price is a significant element of the marketing mix because it is the only element that produces revenue whereas the other elements produce cost. Price reflects the value attached to the service by the service provider and it must correspond with the customer’s perception of value. Service providers offer a range of service at different price levels to cater to the needs of different target segments that may have different levels of purchasing power Prices have different names in services. Example – Insurance (Premium), Banks (Interest), Transport (Fares), Credit card (Fees), Share / stock services (Brokerages) Methods of Pricing 1. Cost-based Pricing It is also called as cost-plus pricing. Under this method the company determines the cost of service delivery as well as a pre-determined rate of profit in order to arrive at a price. It is necessary to analyze all costs accurately and differentiate between fixed and variable costs in order to use cost as the basis for pricing decisions. In the service industries it is complicated to identify and trace the cost to the particular offering. 2. Demand-based Pricing Demand based pricing is generally used where the services are price sensitive. The service providers tend to increase the price of the service offering when demand is high. Whereas tend to lower the price of the service offerings when demand is low. 3. Competition-based Pricing In this method of pricing the price is determined on the basis of competitor’s price. Price under such situations may be used to gain short-term competitive advantage over rivals. Companies have three main choices under this approach: pricing above the competition, below the competition and at par with competition. Example - Uber’s Dynamic Pricing Many times people notice cab fares to be on the higher side compared to normal rates on a weekend night. Such a pricing strategy is recognized as surge pricing or dynamic pricing. Companies such as Uber make use of normal peak-hours, bad weather conditions (rain), events (concerts, movie-premiere), traffic conditions, unseen emergencies and so on in their favor. Systematic algorithms fuel the technique due to which businesses such as Uber cater to the demand-supply asymmetry. Pricing Strategies 1. Skimming strategy In this the services are introduced at a high price. It is assumed that the customers are more concerned about obtaining a quality service rather than cost of the service. As the demand for the services falls, the price level is reduced. 2. Penetration pricing In this, the new services are priced low. The prices are kept low to stimulate trial and thereby ensure customer loyalty. Low pricing is possible when the services are sensitive to price and it is possible to achieve economies of large scale operations by operating at large volumes. 3. Market Segmentation Pricing The pricing strategy adopted to successfully cater to these groups is known as discriminatory pricing on the basis of market segmentation. It may be done on the following basis. a) Different time of consumption: Example travel and hotel tariffs are low during off-season and high during peak season. b) Different point of consumption: Example higher prices charged in cities than suburbs. c) Group of buyers: Example children below 10 you are charged less in amusement parks. 4. Service - Mix Pricing a. Competing Services The service provider may offer a new service similar to the existing one but at a low price. The service firm competes with its own offerings. b. Captive Service In this strategy the customer has no choice but to get additional service from the service provider along with the core service. c. Optional additional service In this, the service provider gives an option to the customer to purchase the optional services along with the core services. 5. Price Bundling Price bundling is a strategy whereby a seller bundles together many different goods / services being sold and offers the entire bundle at a single price. 6. Discount Pricing It is used as a promotional device to encourage use during low-demand time slots or to encourage customers to try a new service (such as an introductory discount). 7. Relationship Pricing The main objective of this type of pricing is to encourage customer loyalty by rewarding it. Thus, Relationship pricing takes the lifetime value of the customer into account while deciding the prices. 8 Competitors Pricing In this method of pricing the price is determined on the basis of competitor’s price. Price under such situations may be used to gain short-term competitive advantage over rivals. This video is on Understand Pricing of Services and it has the following sub-topics. Time Stamps 0:00 What is Services Pricing? 0:41 Understand the Pricing of Services 1:17 Methods of Pricing 2:26 Understand Pricing of Services Example - 3:03 Pricing Strategies [i8KKWfVQ6Dc] |
| Category | Education |
| Tags | Pricing of Services | Services | Methods of Pricing | Pricing Strategies | Pricing of Services Example |
