Not every prospective customer or client will place the same value on your product or service. How do you respond to that? Here are four different approaches you can take.
The first approach is uniform pricing. This is when you charge every buyer the same price, take-it-or-leave-it, for the same thing.
Or, you can charge different buyers different prices for the same thing — or pretty much the same thing. This practice is called differential pricing, and it can take three different forms.
The first form is menu pricing. This is when buyers select which price they want to pay from a list of available options. Because they select different options, they end up paying different prices.
You may have experienced menu pricing the last time you went to the movie theatre. When you picked out a film to see you also had to decide which version you wanted to pay for. For example, the basic film, a 3D version, etc.
The second form is group pricing. This is when different groups of buyers pay different prices for the same thing. Examples of this are discounts for senior citizens, first-time buyers, and non-profit organizations.
The third form is personalized pricing. This is when different individual buyers pay different prices for the same thing.
You’ve experienced this anytime you haggled about the price of something. Here’s another example. Think about the last time you traveled by airplane. Did the people sitting next to you pay different prices for their tickets? You all had the same crappy seats, right? You all got the same tiny bag of peanuts, right? Yet you paid different prices for the same thing.
That’s it. Those are the four approaches to charging for your product or service. There is uniform pricing, and three forms of differential pricing: menu pricing, group pricing, and personalized pricing.
There are pros and cons to using each approach. But that’s a different topic.