Service Industry Quarter 3
Chapter 9: Pricing services
Developing a framework for pricing decisions
Of the 4 P’s price receives the least attention although pricing decision has the
greatest impact on a company’s profits
Pricing behaviour affects customer satisfaction and customer loyalty which impacts
the long term profit potential
First question service marketer asks: what he or she wants to achieve with the
pricing strategy
, First step: determining the objective you want to obtain by setting a price
Second step: determining which pricing strategy the company will follow pricing
strategy provides general guidelines that relate to all the pricing decisions about a
single product line or company
3 main determinants on which the pricing strategy can be based (3 C’s): customer,
cost and competitor
once pricing objective and strategy are clear, decisions have to be made on the
pricing structure (step three)
Service provider has to decide:
which aspects of the service will be priced
what will be included for that price
on which unit the price will be based
if there will be a differentiation among customers
what the payment conditions will be
Price level (fourth step): the actual price that is asked for a service
Price tactics: periodic price promotions or other short term actions
The pricing of a service has to be embedded in the marketing strategy and must be
consistent with the other marketing activities relating to this service
Chapter 9: Pricing services
Developing a framework for pricing decisions
Of the 4 P’s price receives the least attention although pricing decision has the
greatest impact on a company’s profits
Pricing behaviour affects customer satisfaction and customer loyalty which impacts
the long term profit potential
First question service marketer asks: what he or she wants to achieve with the
pricing strategy
, First step: determining the objective you want to obtain by setting a price
Second step: determining which pricing strategy the company will follow pricing
strategy provides general guidelines that relate to all the pricing decisions about a
single product line or company
3 main determinants on which the pricing strategy can be based (3 C’s): customer,
cost and competitor
once pricing objective and strategy are clear, decisions have to be made on the
pricing structure (step three)
Service provider has to decide:
which aspects of the service will be priced
what will be included for that price
on which unit the price will be based
if there will be a differentiation among customers
what the payment conditions will be
Price level (fourth step): the actual price that is asked for a service
Price tactics: periodic price promotions or other short term actions
The pricing of a service has to be embedded in the marketing strategy and must be
consistent with the other marketing activities relating to this service
