Pricing Model
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A Pricing Model is a business model component that outlines how a product or service is priced.
- Context:
- It can (typically) determine how businesses generate revenue from their offerings.
- It can (often) include diverse strategies like Cost-Plus Pricing, Value-Based Pricing, and Competitive Pricing.
- It can range from Freemium Pricing—offering basic services for free while charging for premium features—to Dynamic Pricing, where prices fluctuate based on market demand or customer behavior.
- It can influence consumer purchasing decisions and market positioning.
- It can employ Psychological Pricing techniques to make prices seem more attractive to consumers.
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- Example(s):
- Software Subscription Pricing, where users pay a recurring fee to use software applications.
- Airline Ticket Pricing, characterized by dynamic pricing based on timing, demand, and class of service.
- E-commerce Discount Pricing, often used during special sales events to increase transaction volumes.
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- Counter-Example(s):
- Barter System, where goods or services are exchanged without using a monetary system.
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- See: Revenue Model, Market Penetration Strategy, Customer Value Proposition, Marketing Mix