Pricing Model (marketing)

Since the beginning of time, pricing was done face-to-face negotiations with the seller increasing price until the buyer says no. Then the seller would decrease their price. 

The Final Pricing Decision is somewhere between the Price Ceiling and the Price Floor.

This is really where economics also plays into Business.. where pricing decisions are a factor of demand and competitive factors such as competition, market penetration, and risk, and the capacity of the industry. 

Willingness to Pay: Self-explanatory. 

There are psychological factors to play into pricing such as Framing: the perception of price differences, references prices, and accounting. 

Cost-Based Pricing: Pricing with a MarkUp

Value-Based Pricing: Companies sell Value, not Price. Marketers should convince consumers that price is justified by value provided. 

Type of Price Segmentation: 

-Customer Segment: Different customers pay different prices for the same good

-Product Segment: Different versions priced differently for different products

-Location Pricing: Customers pay different prices in different geographic locations

-Time-based Pricing: Customers Pay prices based on Time of Year.