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Pricing: how to keep customers content


On the MIT Sloan Management Review website, Rebecca W. Hamilton, Joydeep Srivastava and Ajay Thomas Abraham discuss pricing strategy, and the dilemma of whether to "nickel-and-dime" customers by charging separately for things like shipping, installation and warranties, or to bundle everything into one price.

The authors emphasise that one approach does not fit all, and which you should take depends on a variety of factors, such as:

• whether customers comparison shop;
• whether customers are more sensitive to the prices of some components of the overall service than to others;
• whether the price of one component is small or large relative to the others;
• whether the company controls the costs and quality of a particular component;
• which components are most central to what the customer wants.

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