Various pricing strategies used by service marketers are as follows:
1. Price Discounting: The concept of giving discounts on products or services can be a beneficial plan of action to counteract the competitive environment.
Discounting, though being a segment of the marketing plan, should be diligently managed and formulated, to avoid any risk.
Discounting is a regular event in several companies which makes the usual catalog or price lists almost insignificant. This does not mean that discounting is problematic, till the company is getting the desired return.
It can be a matter of concern, when organizations get trapped in a problematic framework of quantity, cash, and other discounts, resulting in nothing other than poor profit margin only.
2. Odd Pricing: In this strategy, the prices of the services are not kept as a rounded figure; in fact, they are kept just below that.
For example, the price of a burger can be 49.90 rather than 50. This is because the customer thinks that he has paid the price for the burger which is below 50.
This is the main reason that this type of pricing is also regarded as psychological pricing. In the opinion of psychologists, there is a certain value and visual importance associated with each digit and thus it must be given due importance while making pricing decisions.
3. Penetration Pricing: When the price for a new product or service is kept low (generally lower than the proposed market price), to grab the attention of customers, it is called ‘penetration pricing’.
The main motive of penetration pricing is to compel customers to buy the low- priced new service.
This strategy is useful to introduce a new service in the market and functions as the most suitable option, in case of the introduction of service with minor variations in the market.
It is also suitable in markets that have price elastic demands. Hence, it is learned that a low priced service (in comparison to similar services available in the market) acts as a competitive advantage.
4. Bundled Pricing: There are a number of services that are used quite often with other types of services.
While there are some services which are combined with products like after-sales services, free delivery, free shipping, and so on.
Bundling is a pricing concept in which different services are clubbed together rather than being priced separately.
Both the service provider and the customers are benefitted from this. The customer feels a simplified buying and payment due to bundling while the service providers receive improved demands and obtain cost economies for the overall operations.
A typical example of this pricing can be seen in the form of holiday packages.
5. Prestige Pricing: Creating an image of quality services, by offering high priced items, is called ‘prestige pricing’. This can be treated as a special type of value-oriented pricing.
This is mainly used by service providers who deal with high quality or status services. There are some specific services that are charged relatively higher than other services such as health clubs, airlines, restaurants, and hotels.
As prestige or a quality image is associated with these types of high prices, the customers give value to this high pricing.
6. Price Discrimination and Segmented Pricing: This is the pricing strategy in which different prices are charged from the different customer groups as the quality of services is perceived to be different from different customer groups despite not having any significant variation in the costs of service providing to different customer groups.
7. Loss Leadership Pricing: When a retailer slashes down the prices of products offered by a very popular brand to induce consumers to visit the outlet, it is called a ‘loss leader strategy’.
Departmental stores and supermarts practice this technique to increase the number of visitors to the store. It is beneficial, as revenues made by the low pricing are more than the original cost.
8. Money-back Guarantees: Providing job opportunities on completion of educational courses is being promised by many vocational colleges and it is mostly advertised through TV advertisements.
A guaranteed job after the completion of the course becomes the tool to allure the students else the students are promised to refund their fees. This is also termed as belated or postponed discounting.
9. Gain and Risk-Sharing Pricing: In these types of pricing strategies, the terms of payment of certain service provider is in the form of “we will alter the profit share if you get the outcomes you expect or else we would not charge anything”.