Posted in Marketing and Strategy Terms, Total Reads: 3605
Definition: Flexible Pricing
It is a pricing strategy in which the final price at which the product or service being sold is open for negotiation between buyers and sellers. This strategy is common in services which are customized as per customer’s requests.
For example a tailor charges a customer based on the amount of customization needed in the clothes and the price which he thinks the customer is capable of paying. Customer then negotiates the price based on his understanding of the market and the rates that he has heard for this service.
Flexible pricing is used by the companies to gain competitive advantage. This way a company is attract customers of different segments like age, geographies, income levels and more. Railways for example has different pricing for senior citizens, adults and children. Thus people of all age groups can travel but at different prices.
Sometimes when a company rolls-out a product in a new market it provides discount to attract attention and create more demand. Established cab companies provide discount offers in every new city where they launch the service. Hence they are able to get more triers and create a name in the market. Once the market is saturated and demand is sustainable these companies set a fixed price.