Smarter Pricing: How to capture more value in your market

5. Certainty

With lower-priced products, customers fear that they may be bearing some of the risks. Certainty is a significant reason for them to pay higher prices.

How it works

In a low-margin industry, airlines need to be price-sensitive buyers. However, their risk aversion is greater than their price sensitivity. GE has crafted a value proposition for leasing the GE90 engine, charged by the hour. However, there is a nuance that makes all the difference to customers. Nagle and Cressman (2002) explain that the price is for uptime and removes uncertainties of time-consequences of scheduled and unscheduled maintenance.