Strategic Management Control by Unknown

Author:Unknown
Language: eng
Format: epub
ISBN: 9783030386405
Publisher: Springer International Publishing

5.3 Dimensions of Price Models

The digitalised society offers buyers many ways to pay for products (Kung et al. 2002; Dixit et al. 2008; Petri et al. 2018). As a result, many innovative price models have appeared. For example, there are situations in which customers pay what they think a product is worth. We find this price model phenomenon in many places—from a wine bar in Berlin (e.g. The Berlin Weinerei) to shareware software programmes (search for Humble Bundle on the Internet for an example). Another price model is freemium. In this model, while the product or service is free, buyers are charged for proprietary features and other add-on products. Google, Flickr, Spotify, and Gillette are examples of companies using this price model.

However, there is a scarcity of research on price setting and price models such as those just described. But, beginning in 2009, researchers are showing increasing interest in new and diverse perspectives on price models and how such models can enable dialogue on business strategy realization. For example, as shown in Fig. 5.2, Olve et al. (2013) developed a meta-model pricing “equaliser” with five dimensions (see also Iveroth et al. 2013). Within the practice of price setting, as well as in the pricing literature (see for example Nagle and Hogan 2006; Piercy et al. 2010; Macdivitt and Wilkinson 2012), different dimensions of price models have been focused upon. The focus is usually on defining a single dimension of price models, such as whether prices are set based on costs, competition, or customer value.

Fig. 5.2The price model equaliser and its five dimensions (based on Olve et al. 2013, our translation from Swedish to English)

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