282 Services Marketing
Demand-based Pricing
Cost-based pricing is oriented to ensure adequate returns to the service pro-
vider, and competition-based pricing aims to attack competition or to defend
the company from competitive attacks. But neither of the two is customer
oriented. Demand-based pricing is customer-oriented pricing. is approach
takes into consideration the customer’s sensitivity to non-monetary costs, the
customer’s perception of value and the customer’s acceptability of a service at
a price. Demand-based pricing promotes the most important pricing concept
for services, that is, “value pricing.” Value pricing uses the value that a service
delivers to customers as the main factor for setting prices.
e value perceptions of a ...