Posted in Marketing and Strategy Terms, Total Reads: 384

Definition: Charge

Charge refers to the fixed fee that a consumer has to pay regardless of the service consumed. In marketing of services, a customer is charged based on the following guidelines

• Value Based pricing – This refers to the value that a customer perceives of a product

• Cost based pricing – This type of pricing is based after calculating all the costs that is required to deliver the product or service to the customer

• Market based pricing – Based on competition and various other market forces including the demand, the organization decides on the pricing.

Pricing is often considered in isolation from the marketing, for example, it is considered as a part of the revenue management and it may appear that pricing managers can go about their business of finding the “right” price to charge with no regard to the rest of marketing strategy, but experience proves otherwise. Pricing is the marketing lever with the most immediate and direct business impact. Management decisions to change prices translate into revenue and profit. Pricing also is closely tied to the other elements of brand strategy.

Traditional pricing practice starts from the classical economic notion that volume demand for a product will decline as price increases. This applies to many marketing situations, under the assumption that “everything else is equal.” However, effective brand marketing can give consumers compelling reasons to pay a premium. The reasons can relate to product quality, special ingredients, processes and craftsmanship.

Example - Electricity or post paid mobile connections usually comes with a charge and is levied irrespective of use or consumption.



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