Smarter Pricing: How to capture more value in your market

Next step: develop a price structure

Price structures are elaborations of fixed prices to address customer price sensitivity and provide incentives to particular behaviours in a matrix that appeals to customers, represents value compared with competition and delivers a profitable return to the vendor. There are two categories:

1. Price scales (second-degree discrimination)

2. Segment criteria (third-degree discrimination).

Quantity discounts are non-linear pricing scales, where a single item is priced at one level and multiple items are charged at discounted levels. Examples are bulk purchase discounts incentivizing customers to buy a greater requirement and store the surplus. For example, rail travellers with First Great Western can buy carnets or ...