OnDemand WTP Pricing Research

Marketers are overlooking pricing as a powerful tool | Campaign

You go into a bar and have a pint and call it a day there. The barman charges you for 2.4 pints because “that is the average amount people drink in a session in this bar – and that’s how we charge, so everyone pays the same”.

It sounds daft but many pricing mechanisms in the marketplace work like that. Water companies charge you a rate that’s the same as for next door – even though they may have two kids, a lodger and a thirsty lawn, where you just have a cat and a patio.

The BBC takes the concept to another level, charging a blanket rate for the mere possession of the technology to receive its services. It was interesting to see Alan Rusbridger refer to the BBC’s “business model” in a recent New Statesman piece defending the broadcaster. Some business model! Put people in prison if they don’t buy the product, and make them pay full price, in advance, no matter how little they use. Try that on your brand.

The absurdity of blanket charges, and our long-standing acceptance of them, illustrate why some of the most welcome innovation in recent times has come in pricing. Ryanair may be criticised for its bag fines, and Uber for its surge fares, but these pricing pioneers have given consumers more flexibility and marketers a glimpse of new possibilities for differentiation.

At best, they also make a societal contribution because, as well as fostering a kind of contemporary fairness, price innovation can prompt unexpected and socially beneficial consumer behaviours.

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Marketers are overlooking pricing as a powerful tool.

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