Usage Pricing

Description

Price items not as a single transactional cost but in an ongoing way, based on how and when the product or service is used.

The price may be fixed or may be changed dynamically based on demand factors such as the time of day or the ability of the customer to pay.

As ever, the price needs to take into account alternative and what competitors charge. However, when competitors use a single transactional price, and even if you also do this, you can have a usage-based pricing option.

Discussion

Some pricing lends itself naturally to usage charges based on duration of use, such as car parks. Other pricing may be based on urgency such as a plumber's price for out-of-hours emergency call-outs.

A benefit for customers of usage pricing is that they avoid up-front costs. This can be particularly attractive to businesses and to people who cannot afford up-front prices.

There is scope for innovation in usage pricing that can give companies competitive advantage.

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Usage Pricing

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Quick links

Disciplines

Techniques

Principles

Explanations

Theories

And