Smarter Pricing: How to capture more value in your market

Pricing to help customers behave profitably

Of course, pricing can be used to encourage customers to behave profitably.

Historically, water supply to domestic households in the UK was always charged at a flat rate based indirectly on property values. With no correlation between the amount charged and usage, customers had no incentive to conserve water. Thus, in periods of drought, action had to be taken to impose on all customers bans on the use of hose-pipes. In the 1980s, pricing began to be used as a mechanism to encourage responsible behaviour. Water companies began requiring water meters in all new homes. Existing households were encouraged to install water meters, and a long-term programme began to bring about the linking of usage and payment, ...