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What is service?
Service is a set of one time consumable and perishable benefits Core Services: A service that is the primary purpose of the transaction. E.g.: a haircut or the services of lawyer or teacher.
Supplementary Services: Services that are rendered as a corollary to the sale of a tangible product. Eg: Home delivery options offered by restaurants above a minimum bill value
Characteristics of Services
Intangibility Perishability Inseparability Non ownership Variability
Pricing
Place Promotion People Process Physical Evidence
Service Pricing
Pricing is the mechanism by which sales are transformed into revenue
Why pricing of Service is critical?
1) Customers knowledge of service with respect to reference price. 2) Pricing of service is unique. 3) Providers may face difficulty in estimate price in advance. 4) Individual customer needs are different. So comparison of price become difficult.
Pricing Tripord
Pricing Strategy = Cost+ Competition+ Value to customer The cost that a service provider needs to recover is through imposing a minimum price or floor price for a specific service offered. Which has to match with Customers perceived value of the offering which sets a ceiling on the price. Price = Direct Cost+ Overhead cost+ Profit Margin.
3 Pricing strategies when customer means value is the quality one get from the price. eg: Value price, market segmentation pricing. 4 Pricing strategies when customer means value is all that one get for all that one give. eg: Result based pricing