A number of factors will affect the way you price your products and services. One factor that most businesses don’t consider is who will eventually pay for it, because this can make a significant difference to the price. When you position your product for different potential buyers, you can find creative pricing options – especially if you’re selling products online.
Let’s look at some of the options…
Customer buys
The simplest and most obvious option is for the customer to pay for your product. This is, of course, the most common option, and many businesses never look beyond it.
Customer leases
Many products and services are now being offered for rent rather than outright purchase – for example, Web hosting, mobile phones and cable television. There’s no reason you can’t consider offering the same option for your products and services. Although the customer never “owns” the product, she might prefer this option because it helps her cash flow, and gives her the option to upgrade easily in the future.
Customer becomes a member
Rather than selling products outright at full price, you offer a membership service, where subscribers pay a fixed monthly fee and get access to the products in return. This is different from leasing, because the customer as “member” usually gets access to many products, and possibly even additional services not available to others.
This is attractive for customers who are loyal fans of your business, and so would like to be treated as one of the “inner circle”.
Advertiser pays
Your customers pay nothing (or very little) for your product, because advertisers pay instead. This, of course, is the business model of many free online platforms, including Google and Facebook.
Government pays
A related situation is where your product is eligible for a government grant. This typically happens in two ways: Either you get the grant, in which case the government is paying you; or you educate your customers about applying for the grant or rebate, so they end up paying less.
Employer pays
If your products are aimed at employees, they might expect their employers to pay for them. This can be highly profitable for you, because you can make a single bulk sale to the employer rather than having to convince every employee to buy individually.
Nobody pays
You might be willing to offer certain products and services free, under certain circumstances – for example, when bundling them with other, more profitable, products; or when including them as an incentive for taking action.
You could also offer products free as a way to bring potential customers into your network, knowing you can promote and sell to them in the future.
You pay
Taking this one step further, you might even be willing to pay your customers, rather than the other way around – for example, because you’re building a database or conducting valuable market research.
