02. types of pricing strategies

1. The Science of Start Session 5: Pricing strategies paul shaw smith scientific business strategy

2. paul shaw smith scientific business strategy What do you need to learn before the next session? ?

3. paul shaw smith scientific business strategy 1 What is the best price for your product offering?

4. Determining pricing methods ? * * * * In groups of 3 – 4 brainstorm times: Share with your team members: What method you used to determine your pricing Give a name to each method Create a list of different methods * Time: 10 minutes * Pick one person to read your methods to the class

5. Debriefing questions What is the perceived value of the product? What is the perceived value of different features? What does the product cost? What do different features cost? What is the customers budget? How much money does the customer have? How unique is the product or service? What is the customer ROI?

6. paul shaw smith scientific business strategy Cost pricing 1

7. Cost pricing

8. paul shaw smith scientific business strategy Skim Pricing 2

9. Skim pricing

10. paul shaw smith scientific business strategy Loss leader 3

11. Loss leader pricing

12. paul shaw smith scientific business strategy Market-oriented pricing 4

13. What are the competitors charging?

14. paul shaw smith scientific business strategy Penetration Pricing 5

15. Penetration pricing

16. paul shaw smith scientific business strategy Premium Pricing 6

17. Premium pricing

18. Premium pricing 90,000 is that tractors price if it is only equivalent to competitors tractor 7,000 is price premium for Caterpillar’s superior durability 6,000 is the price premium for Caterpillar’s superior reliability 5,000 is the price premium for Caterpillar’s superior service 2,000 is the price premium for caterpillars longer warranty on parts 110,000 is the normal price to cover Caterpillar’s superior value -10,000 discount ------------- 100,000 final price

19. paul shaw smith scientific business strategy Contribution Margin-based Pricing 7

20. Contribution margin based pricing Price Profit

21. paul shaw smith scientific business strategy Pay what you want 8

22. Radiohead “pay want you want”

23. paul shaw smith scientific business strategy Freedium 9

24. Freeduim – Upgrade model

25. Freeduim – Advertising model

26. paul shaw smith scientific business strategy ? What pricing strategy will you use?