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Contextual Pricing by Cecilia Nguyen, John G. Hanson, Michael Barzelay, Robert Docters

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Chapter 6

Price Structure

My new book is coming out soon. It’ll be the usual rubbish, but it won’t cost much. That is the bargain we are going to strike with you.

JOHN LENNON, BEATLES CHRISTMAS MESSAGE, 1965

Price structures, sometimes called price models, are what translate events into a dollar amount. Structure can also be defined as the terms under which you sell your service or good. A simple “flat” price structure is a transfer of ownership with a specific price tag. Other price structures are more complicated, and can be considered the “formula” by which the transaction will command cash flows. More complex sales may have components of a flat sale price, plus components which are variable with usage (by the unit, by the input, by the event, ...

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