This is perhaps the most-common way to price the products that you take to market. With this model, you are going to use the cost of production as the basis for the final price that consumers see when they make a purchase. The multiple that you use to price your goods is going to depend on the industry in which you are working. Some industries see multiples around 2-3 times the cost of production, while other industries are around 5 times or higher.
This is a great model to use if you are offering a service or, more specifically, a selection of services. In the portfolio pricing model you are going to set up a pricing structure that makes sense throughout your product or service line. For instance, if you run an accounting agency, you may offer basic tax preparation services for a certain rate. Then from there, your more advanced accounting services move up the pricing scale. It makes sense to price out all of your services in this way so that each of your customers feels they are getting a good deal.
As the name would indicate, this pricing model is all about the market conditions that you find around you. Fortunately, in the internet age, it is relatively easy to determine market pricing for just about any product or service. A quick internet search should lead you to the prices of your competitors, and you can then react appropriately. Trying to sell a product that falls well outside the market norms for pricing is always going to be an uphill battle, so the market pricing model is a smart one to use.
Flat-rate pricing means offering one product, with the same set of features, for one price.
This model is easy to sell and communicate. Sales and marketing can focus on a single offer that is clearly defined.
The last model on our list is one that will only work for a specific segment of the market. In freemium pricing, you give away your base service or product for free, in the hopes that satisfied customers will decide to pay for more advanced features.
There are several different value metrics to consider:
Users: Customers pay more as the number of individuals who can access the product increases
Active users: Customers pay more as the number of people using the product increases
Feature usage: Customers pay more as the number of features they use increases, regardless of the number of users
Activity: Customers pay for each activity conducted. For example, email marketing platform users could pay per email sent
A price agreed upon for the supply of goods or services by both buyer and seller. The final price for a deal is determined through Negotiation between the buyer and seller. The effect of Negotiation on pricing depends on the negotiating skills and positions of both parties, as well as the commitment of both parties to pursue a long-term business relationship.
Results Orientation: We heard negatives about analysts who think the analysis itself is the objective. On the other hand, we heard positives about analysts who recognize that their work is a means to an end, and who always “keep their eye on the prize” i.e. business and financial results.
Change Management: Most participants cited a need for pricing analysts to understand organizational dynamics and how to go about fostering change within their organizations. They expressed a need for pricing analysts to be masters of “influence without authority”. As one participant put it, “Pricing is 40% figuring out what to do and 60% getting the company to do it.”
Problem Solving: We heard strong negatives about pricing analysts who could identify potential problems, but had no idea how to go about solving them or preventing them from happening in the future. Positives were expressed toward analysts who were capable of devising multiple potential solutions to the same problem or issue.