Question

Technology has changed the way companies price goods and service.  

LIST 2-3 well known firms that are currently engaged in a unique form of pricing strategy, and explain how it successfully deals with pricing challenges.

Answer 1

Following are some unique pricing strategies and examples of firms using them:

1. Pay what you want Pricing Strategy.This strategy does not result in significant profit and loss but result in lots of free marketing.Example Panera Bread Restaurants and Humble Bundle which is a music and game store is using this strategy. For this strategy to be successful the customers should be fair minded and understand the value of product. If the ecommerce website has link to charities then this strategy will be successful as customers love doing charity thus increasing the share of revenue. Offering an incentive is another additional feature of this type of pricing. Like an additional product can be offered if the price exceeds a certain threshold level.
2. Status Quo Pricing.Status quo pricing strategy copies the price levels of its competitors or maintains the current price levels of similar products or services in the market. Status quo is defined as the way things are, as opposed to the way they could be. Example Suppose American Airlines reduced its fares for summer flights by $100. Delta Airlines changes its pricing structure and reduces its flights by $100 as well. Delta is employing status quo pricing.
3. Free Pricing Strategy.In this software is given away for free and customer is charged either for support or for premium features.Example Hortonworks, a development firm that offers the Apache, Hadoop platform for free and then charges for support of that platform. In this customers come to the site to get the free products and once they are on the site, you can up-sell or cross-sell them other products. It is very helpful in case of sites offering seasonal products.Example  A retailer could give away free U.S. flags during the July 4th holiday to generate traffic, while also pushing other non-free July 4th merchandise.It is very successful in case of firms offering basic version and premium version.Example The life insurance industry uses this approach, where a basic $10,000 insurance is often free. If even a small percentage of customers buy the premium offering, the insurer makes a profit.
4. Flat Pricing.In this a limited number of prices are used for all products. This is successful in case of websites selling similar products that are priced at the same level.Example Dollar Stores like Dollar tree is offering flat pricing.
5. Personalized Pricing.It is latest automated pricing model which uses automation to target each individual website visitor with a price that matches their personal buying threshold. Example Hotel website Orbitz. It helps in wide profit margins as products are sold with good margins, allowing the retailer to offer discounts at any time.It results in repeat customers as loyal customers are rewarded with bonus and incentives.