Answer to Question #294705 in Marketing for Ruth

Question

Types of Price

Answer 1

Prices are set according to a wide variety of strategies that seek to maximize revenue in a competitive market. Prices may be designed to establish a sustainable business based on good customer relationships or they may be designed to maximize revenue now at any cost to the future. The following are common types of price.

Psychological Prices

A price based on numerical cognition.

Customary Price

A customary price is a historically common price that remains in place for an extended period of time.

Line Pricing

Line pricing is a series of price categories for different levels of quality.

Bundle & Bulk

Bundle prices tie multiple items together for a single price. Bulk prices are set by the amount purchased such that it is cheaper to buy more.

Recurring Price

A recurring price for a service such as a monthly fee for a streaming media service.

Metered Service

A price based on usage such as an internet service that charges for bandwidth.

Multidimensional Price

A price based on a formula that may include a fixed price plus a usage-based price. These may be designed to reflect the economics of the service being provided. In some cases, they are also designed to inflate prices by making terms too complex for customers to understand.

A flat price is a single dimensional price that is offered to customers without any complex terms or exceptions. These are popular with customers, particularly in an industry that is known for complex billing practices. For example, an internet plan that offers a fibre connection for $50 a month with unmetered bandwidth.

Discounted Price

A price that is lower than a previously offered price. Used to promote sales and clear inventory.

Contingency Pricing

A price that is only paid if a result is achieved. Associated with legal fees.