Price Statergy

What price is right?

Suppose there are two people A and B, they both subscribe to the services of a gym. A

pays the annual subscription of INR 12000 while B pays in monthly installment of INR

1000. Both of them pay the same amount but B is more likely to continue exercising at

the club than A. A will look forward to get the money worth early in the membership, but

this drive will lessen as the INR 12000 fades into the past. While A will be reminded of

the drive as he/she has to incur the cost per month. The gym owner may argue that B

will be least likely to take the membership for another year, but like we say it all

depends.

Price, the name may vary according to the interest of the sellers. It may be rent, fee,

donation, subscription, tuition, toll, honorarium; fee for professional service etc. price is

what is given up in exchange of a good service. We often hear a consumer asking for a

"reasonable price". So what is this reasonable price? It is the perceived reasonable

value at the time of transaction. Price paid is based on the satisfaction customers

expect to receive and not necessarily the satisfaction they actually receive.

Thus the executives must draw the customer's attention to the price that was paid is

counter intuitive. People are more likely to consume when they feel "out of pocket". In

case