![]() ![]() Some of the paid seats might look the same as the other seats but they have subtle privileges attached to them.There are seats that are priced 2x than the other paid seats because some people can pay more than the others. ![]() Some seats are priced while some seats are not because the airlines know that people are willing to pay for freedom of choice in where they will be sitting for 3 hours.The answers that a marketer like you will give are: Why are people paying for them even when there are free seats?.And why is it that the paid seats get booked first even before all the free seats are booked?.Why is it that some seats are priced 2x some of the other seats while quite a lot of seats are available for free?.The questions that a naive person may ask are: The orange seats up in the front would cost you ₹600 for selecting them.įor the blue seats just behind them, you will have to shell out ₹300.Īll the remaining seats are usually available for booking without any cost. Similarly, all the seats on this aircraft are exactly the same. There is no business class or different kind of seats in terms of the way they look or feel when you sit on them. If we take the example of Indigo Airlines, we know that all the seats are exactly the same. And you would be familiar with this seating plan of the aircraft where you are supposed to choose your seats. Let us understand it through this example of Value Based Pricing.Įver did a web check-in on a flight before boarding it? Quite a few of you would have. While the cost-plus pricing emanates from within the organization, Value based pricing comes from the outside – from your customers.Īlso Read: How to Price your Product better in 8 Steps (Part 1 of 2) You could very well call it Customer-Based Pricing.īecause, effectively, your customer is setting the price without really setting it for you.Īnd Value Based Pricing is the complete reverse of Cost-Plus Pricing. Simply put, Value Based Pricing is when the price is set based on how much your customer values your product. Let’s begin by understanding what is value based pricing. And that’s what your job will be as a marketer. In value based pricing you are more receptive to your customer’s needs and wants. When you price your products as per this strategy you not only maximize your revenue but you also do a good job of maintaining a positioning for your product. The answer to that is Value Based Pricing.Īlso Read: How to Price Your Product – The Fundamentals What extra value can you provide to your firm as a marketing student or as an MBA? There’s not much thinking that goes into it.Īnd that is the reason why you as a budding marketer should stop thinking about it.Ĭost-plus pricing is so basic that even an accountant can do it. That’s because Cost-Plus Pricing is really intuitive. “But we thought it was the best way to price” The last article I wrote titled Cost Plus Pricing is a Dangerous Drug created, both, a lot of excitement and confusion among quite a few of you.Ī few of you wrote to me, almost perplexed that “If not Cost Plus then what?” In this article, not only will I explain to you what is Value Based Pricing but I will also give you a step-by-step procedure for arriving at a value based price for your product.īut before I begin telling you about what is value based pricing here’s some flashback from my last post on pricing. ![]()
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