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Performance-based pricing increases the risk of the seller but it creates opportunities for greater rewards. Sellers who use this pricing strategy have an advantage in attracting customers. Performance-based pricing has fewer chances to work if the desired outcome is not clearly defined and quantified between the two parties. [19]
Value-based price, also called value-optimized pricing or charging what the market will bear, is a market-driven pricing strategy which sets the price of a good or service according to its perceived or estimated value. [1]
The EVC process enables businesses to capture more value than a traditional cost-plus pricing strategy. Companies can leverage the method to estimate the value a customer derives from purchasing a product or service. The EVC is calculated by adding both tangible and intangible value elements a product or service provides to a customer. [2]
Yield management (YM) is a variable pricing strategy, based on understanding, anticipating and influencing consumer behavior in order to maximize revenue or profits from a fixed, time-limited resource (such as airline seats, hotel room reservations, or advertising inventory). [1]
Dynamic pricing, also referred to as surge pricing, demand pricing, or time-based pricing, and variable pricing, is a revenue management pricing strategy in which businesses set flexible prices for products or services based on current market demands. It usually entails raising prices during periods of peak demand and lowering prices during ...
Value Based Pricing. Value-based pricing strategy is founded on a differentiation strategy, and uses buyer’s perceptions of value, which are based on experience. It is customer-driven, and is expressed in terms of setting the highest price possible to the greatest extent that the market will bear.
Pricing is the process whereby a business sets and displays the price at which it will sell its products and services and may be part of the business's marketing plan.In setting prices, the business will take into account the price at which it could acquire the goods, the manufacturing cost, the marketplace, competition, market condition, brand, and quality of the product.
Price optimization utilizes data analysis to predict the behavior of potential buyers to different prices of a product or service. Depending on the type of methodology being implemented, the analysis may leverage survey data (e.g. such as in a conjoint pricing analysis [7]) or raw data (e.g. such as in a behavioral analysis leveraging 'big data' [8] [9]).