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The strategy enables price changes to goods and services relative to increases or decreases in the product cost which are simple to communicate and justify to customers. [8] When there is little market intelligence, the use of a cost-plus pricing strategy compensates for the lack of information by setting prices based on actual costs. [9]
Contribution margin-based pricing maximizes the profit derived from an individual product, based on the difference between the product's price and variable costs (the product's contribution margin per unit), and on one's assumptions regarding the relationship between the product's price and the number of units that can be sold at that price.
Price optimization is the use of mathematical analysis by a company to determine how customers will respond to different prices for its products and services through different channels. [1] It is also used to determine the prices that the company determines will best meet its objectives such as maximizing operating profit . [ 1 ]
The greater the nontransferable investments a person has in a given relationship, the more stable the relationship is likely to be. The same investment concept is applied in relationship marketing. Databases are the major instrument to build differentiated relationships between organizations and customers.
A company chooses to pursue one of two types of competitive advantage, either via lower costs than its competition or by differentiating itself along dimensions valued by customers to command a higher price. A company also chooses one of two types of scope, either focus (offering its products to selected segments of the market) or industry-wide ...
In most markets, prices adjust quickly to disruptions. Not in insurance. Most drivers have either a six- or a 12-month policy, so insurers can change a given customer’s price only once or twice ...
"Personalized pricing" (or first-degree price differentiation) – selling to each customer at a different price; this is also called one-to-one marketing. [13] The optimal incarnation of this is called "perfect price discrimination" and maximizes the price that each customer is willing to pay. [13]
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