Lots of people write about “pricing models,” but I’ve yet to find a good definition. So I’ve come up with my own that I’m quite pleased with:
A pricing model is how a business captures a portion of the value it creates in the marketplace.
Chris Austin
Cost-based pricing, competition-based pricing, and value-based pricing are all examples of pricing models. You might consider them the vanilla, chocolate, and strawberry ice cream of pricing models. There are more exotic flavors, but these are the three basic ones.