Exploring Business Models: Pricing and Revenue Management
Exploring Business Models: Pricing and Revenue Management
Exploring Business Models: Pricing and Revenue Management
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 1
Effective Pricing Is Central to
Financial Success
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 2
Alternative Objectives for Pricing
(Table 5.1)
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 3
Pricing Strategy Stands on
Three Legs
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 4
The Pricing Tripod
Fig 5.1
Pricing strategy
Competition
Costs Value to customer
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 5
Three Main Approaches to Pricing
Cost-based pricing
Set prices relative to financial costs (problem: defining costs)
Activity-based costing
Pricing implications of cost analysis
Competition-based pricing
Monitor competitors’ pricing strategy (especially if service
lacks differentiation)
Who is the price leader? Does one firm set the pace?
Value-based pricing
Relate price to value perceived by customer
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 6
Value-based Pricing
Understanding Net Value (Fig 5.2)
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 7
Putting Service Pricing
into Practice
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 8
Pricing Issues:
Putting Strategy into Practice (Table 5.3)
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 9
Putting Service Pricing
into Practice (1)
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 10
Putting Service Pricing
into Practice (2)
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 11
Putting Service Pricing
into Practice (3)
Slide © 2007 by Christopher Lovelock and Jochen Wirtz Services Marketing 6/E Chapter 5 - 12