Innovative Pricing Models

Innovative Pricing Models

Traditionally, businesses make money by charging a specific price for a product or services.  As businesses evolve, and the product and service offerings become more complex, businesses have to be creative in their pricing model to ensure they maximize profits.   Here are three innovative pricing models that have been become very popular within the last few years.

Advertising Revenue

Facebook and google are giant corporations, but they don’t make money off their users.  They make money on the advertisements.  Since their products/services attract a large client base, marketers recognize the potential to advertise on this platform.  This model is not for everyone, as you will need a large client base (at least in the millions) to succeed.

The “Freemium” Model

Many software companies, like LinkedIn and Dropbox, offer a free base product.  Their pricing model is to charge for premium and advance features.  The trick with this model is that it allows the users to try out the product and perceive enough value to upgrade after.  However, you should be careful when determining the base product features.  You should give enough features to entice the clients to upgrade, but not too much that they are comfortable with what they have.

Discounted Products with Paid Services

In order to hook clients in, some companies give out discounted products in exchange for a subscription service.  One classic example is cell phone companies, where the costs of the cell phone are cheaper when you sign onto phone plans.  When you decide to go with this, make sure you make enough margins on the services to cover for the discounted products. 

Until next time!

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