Question

What roles do price-offer configuration, price metrics, price fences and gain-loss framing play in segmented structures, and how do they affect a pricing decision?

Answer 1

Knowing that unsegmented rates restrict the likelihood of competitive development by
restricting demand for lower value consumers and reducing high value consumer margins .

Price Offer Configuration:

Noticing that the benefit differential of a buyer's product and the use ratio to the vendor are relevant when determining the price of goods and services.Comprehending the discrepancy between having to earn more revenue from the higher price segment as compared to the lower price segment more value. The fixed cost is not dependent on the buyer usage number so that the expense of the product would expense the purchaser more as the demand rises.This is useful when each customers have different price sensitivities for goods and services.

Price metrics:

It is the units to which the price is applied.It defines what excatly the buyer buys per unit/per sec/per use etc.It is quick to enforce.Should be competitive towards the price of rivals. Would measure comply with how consumers perceive demand.It can track difference in cost to service easily.Two types of metrics are performance metrics and tie in metrics.One of the example for price metrics is answering phone service.

Price fences:

Set of requirements that consumers have to follow in order to apply for a cheaper offer.Different fences are buyer identification fences,location fences,time of purchase fences,purchase quality fences.Examples for this are pricing depending on age,student promotions and regional newspaper offers.

Gain-loss framing :

Discounts are viewed as benefits and surcharges are interpreted as loses. The effect of loss is much stronger than the influence of gain of the same degree. Customers never focus their choice purely on economic consequences rather than on psychological reaction at the moment of purchase.