Published by:
Harvard Business Publishing
Length: 20 pages
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Abstract
With inflation high, a global recession possible, and consumers spending carefully, many companies are concerned about preserving profit margins. In this article, pricing consultant Rafi Mohammed argues that instead of simply adjusting prices, firms should consider adding new ways to charge customers. He outlines 18 different pricing tactics that can be used for various purposes: to accommodate buyers with different usage needs, to appeal to people on a tight budget, to spur purchases by customers who love a good deal, to achieve favorable prices when the value of an offering is uncertain, and to increase business efficiency. Mohammed urges companies to think creatively about whether a pricing convention commonly used in other industries might work for their own product or service. For example, Allstate has borrowed the metering model and introduced auto insurance premiums based on actual miles driven. Mammoth Holdings, which owns more than 100 car washes, offers monthly subscriptions for unlimited washes. Some hotels sell day passes to their pools and fitness facilities. By creating a mix of pricing options, companies are likely to please existing customers and attract new ones.
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Abstract
With inflation high, a global recession possible, and consumers spending carefully, many companies are concerned about preserving profit margins. In this article, pricing consultant Rafi Mohammed argues that instead of simply adjusting prices, firms should consider adding new ways to charge customers. He outlines 18 different pricing tactics that can be used for various purposes: to accommodate buyers with different usage needs, to appeal to people on a tight budget, to spur purchases by customers who love a good deal, to achieve favorable prices when the value of an offering is uncertain, and to increase business efficiency. Mohammed urges companies to think creatively about whether a pricing convention commonly used in other industries might work for their own product or service. For example, Allstate has borrowed the metering model and introduced auto insurance premiums based on actual miles driven. Mammoth Holdings, which owns more than 100 car washes, offers monthly subscriptions for unlimited washes. Some hotels sell day passes to their pools and fitness facilities. By creating a mix of pricing options, companies are likely to please existing customers and attract new ones.