Why haven't you migrated to value-based pricing (service startups)

by nicolasseo. Posted on Sep 10, 2020    0    6


I have studied, learned, and slowly applied the concept of value-based pricing.

With it, you set prices based on the perceived or estimated value of a product or service. This means that the cost of the product or market trend doesn't play a role when pricing.

It's interesting when applied. Wonderful when you charge through it.

Airplane tickets are a great example of this. Date, seat, and season affect the price even though you are going from A to B.

The interesting thing is that I don't see many service businesses using this pricing model.

It can be a local business or Walmart and they still charge by the hour.

What's your pricing model and why?


Comments

sprfrkr 1

Airplane tickets are not value-based pricing. They are cost and demand based.

Speedz007 1

Because the reality is that unless you're at the breaking edge of technological innovation (and even then), there isn't a more tangible way to differentiate with competing solutions other than pricing.

While cost-based pricing may not win you deals, in a competitive market it makes sure you don't lose any deals because of it either.

GaryARefuge 2



>The interesting thing is that I don't see many service businesses using this pricing model.

In my equally anecdotal experience I see many service businesses do this quite often.

They may offer the same quality of service as the next company but, they put a "luxury" or "specialist" spin on their marketing and sales approaches that create a perception of additional value.

GaryARefuge 2



>Airplane tickets are a great example of this. Date, seat, and season affect the price even though you are going from A to B.

Is this not based upon market trends? The market trend of more people wanting to travel during X season means the demand for seats is higher. Thus, the price charged can be higher.

dubaiRedditor123 1

It is. Market trends are usually tightly linked to date, season, etc... Airlines usually model their pricing based on last year's activity, some systems take it a step further factoring in willingness to pay, where the user is buying the ticket from, etc... But yeah, mostly boils down to season, dates.