Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
McGraw-Hill © 2000 The McGraw-Hill Companies
1
SMSM
McGraw-Hill © 2000 The McGraw-Hill Companies
Chapter 16
PRICING OF SER...
McGraw-Hill © 2000 The McGraw-Hill Companies
2
SM
Objectives for Chapter 16:Objectives for Chapter 16:
Pricing of Services...
McGraw-Hill © 2000 The McGraw-Hill Companies
3
SM
Figure 16-2Figure 16-2
What Do Customers Know aboutWhat Do Customers Kno...
McGraw-Hill © 2000 The McGraw-Hill Companies
4
SM
Figure 16-3Figure 16-3
Customers Will Trade Money forCustomers Will Trad...
McGraw-Hill © 2000 The McGraw-Hill Companies
5
SM
Figure 16-4Figure 16-4
Three Basic Price Structures andThree Basic Price...
McGraw-Hill © 2000 The McGraw-Hill Companies
6
SM Figure 16-5Figure 16-5
Four Customer Definitions of ValueFour Customer D...
McGraw-Hill © 2000 The McGraw-Hill Companies
7
SM
Figure 16-6Figure 16-6
Pricing Strategies When thePricing Strategies Whe...
McGraw-Hill © 2000 The McGraw-Hill Companies
8
SM
Figure 16-7Figure 16-7
Pricing Strategies When thePricing Strategies Whe...
McGraw-Hill © 2000 The McGraw-Hill Companies
9
SM
Figure 16-8Figure 16-8
Pricing Strategies When thePricing Strategies Whe...
McGraw-Hill © 2000 The McGraw-Hill Companies
10
SM
Figure 16-9Figure 16-9
Pricing StrategiesPricing Strategies
When the Cu...
McGraw-Hill © 2000 The McGraw-Hill Companies
11
SM
Figure 16-10Figure 16-10
Summary of Service Pricing StrategiesSummary o...
Upcoming SlideShare
Loading in …5
×

pricing of services

4,261 views

Published on

pricing

Published in: Business

pricing of services

  1. 1. McGraw-Hill © 2000 The McGraw-Hill Companies 1 SMSM McGraw-Hill © 2000 The McGraw-Hill Companies Chapter 16 PRICING OF SERVICES
  2. 2. McGraw-Hill © 2000 The McGraw-Hill Companies 2 SM Objectives for Chapter 16:Objectives for Chapter 16: Pricing of ServicesPricing of Services • Discuss three major ways that service prices differ from goods prices for customers • Demonstrate what value means to customers and the role that price plays in value • Articulate the key ways that pricing of services differs from pricing of goods • Delineate strategies that companies use to price services • Give examples of pricing strategy in action
  3. 3. McGraw-Hill © 2000 The McGraw-Hill Companies 3 SM Figure 16-2Figure 16-2 What Do Customers Know aboutWhat Do Customers Know about the Prices of Services?the Prices of Services? Pet Sitter? Nutritionist? Wedding Advisor? Braces?
  4. 4. McGraw-Hill © 2000 The McGraw-Hill Companies 4 SM Figure 16-3Figure 16-3 Customers Will Trade Money forCustomers Will Trade Money for Other Service CostsOther Service Costs Effort = Time or or Psychic Costs
  5. 5. McGraw-Hill © 2000 The McGraw-Hill Companies 5 SM Figure 16-4Figure 16-4 Three Basic Price Structures andThree Basic Price Structures and Difficulties Associated with Usage forDifficulties Associated with Usage for ServicesServices Demand-Based Cost-Based Competition- Based PROBLEMS: 1. Costs difficult to trace 2. Labor more difficult to price than materials 3. Costs may not equal value PROBLEMS: 1. Small firms may charge too little to be viable 2. Heterogeneity of services limits comparability 3. Prices may not reflect customer value PROBLEMS: 1. Monetary price must be adjusted to reflect the value of non-monetary costs 2. Information on service costs less available to customers, hence price may not be a central factor
  6. 6. McGraw-Hill © 2000 The McGraw-Hill Companies 6 SM Figure 16-5Figure 16-5 Four Customer Definitions of ValueFour Customer Definitions of Value “Value is Low Price” “Value is Everything I Want in a Service” “Value is the Quality I Get for the Price I Pay” “Value is All that I Get for All that I Give”
  7. 7. McGraw-Hill © 2000 The McGraw-Hill Companies 7 SM Figure 16-6Figure 16-6 Pricing Strategies When thePricing Strategies When the Customer Defines Value as Low PriceCustomer Defines Value as Low Price “Value is Low Price” Discounting Odd Pricing Synchro-pricing Penetration Pricing
  8. 8. McGraw-Hill © 2000 The McGraw-Hill Companies 8 SM Figure 16-7Figure 16-7 Pricing Strategies When thePricing Strategies When the Customer Defines Value asCustomer Defines Value as Everything Wanted in a ServiceEverything Wanted in a Service “Value is Everything I Want in a Service” Prestige Pricing Skimming Pricing
  9. 9. McGraw-Hill © 2000 The McGraw-Hill Companies 9 SM Figure 16-8Figure 16-8 Pricing Strategies When thePricing Strategies When the Customer Defines Value asCustomer Defines Value as Quality for the Price PaidQuality for the Price Paid “Value is the Quality I Get for the Price I Pay” Value Pricing Market Segmentation Pricing
  10. 10. McGraw-Hill © 2000 The McGraw-Hill Companies 10 SM Figure 16-9Figure 16-9 Pricing StrategiesPricing Strategies When the Customer Defines Value asWhen the Customer Defines Value as All that is Received for All that is GivenAll that is Received for All that is Given “Value is All that I Get for All that I Give” Price Framing Price Bundling Complementary Pricing Results-based Pricing
  11. 11. McGraw-Hill © 2000 The McGraw-Hill Companies 11 SM Figure 16-10Figure 16-10 Summary of Service Pricing StrategiesSummary of Service Pricing Strategies for Four Customer Definitions of Valuefor Four Customer Definitions of Value “Value is Low Price” “Value is Everything I Want in a Service” “Value is the Quality I Get for the Price I Pay” “Value is All that I Get for All that I Give” Discounting Odd Pricing Synchro-pricing Penetration Pricing Prestige Pricing Skimming Pricing Value Pricing Market Segmentation Pricing Price Framing Price Bundling Complementary Pricing Results-based Pricing

×