Different Approaches to Pricing

Different Approaches to Pricing

Cost plus pricing is one of the biggest evils within businesses. It appears the safe approach but fails to maximise opportunity. Also, taking this approach, sale prices tend to erode to the level of cost prices. This is unacceptable for most businesses.

There are in fact many different solutions to determining a price. Some of the ideas are: temporal/time based pricing; multidimensional pricing; risk based pricing; variable pricing. A chart showing these is available for download.

One of the concepts on the chart is the diamond-water paradox:

The diamond-water paradox is the apparent contradiction, or paradox, that although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market.

Can you suggest any more approaches to pricing that I can add to the chart?

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I am a partner at Succession Plus. We are specialists in providing proactive, focused and strategic advice for SME owners to help them manage strategic Business Succession and Exit Planning. I am enjoying a career that has embraced product and service businesses at all stages of their journey. I have worked in technology, telecoms, consumer electronics, payments, media, and publishing.

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