.png)
Estd 4.22.2023
Based on the principles in our pricing strategy book, Price to Scale, segmenting your pricing by customer type is indeed a valuable strategy. The book illustrates several practical methods for doing this:
• Tailored Discount Ranges:
The book explains that you can distinguish between customer segments (such as Commercial, Mid-sized, and Enterprise) by assigning each a discount range. For example, Commercial discounts might range from 10–30%, Mid-sized 20–50%, and Enterprise from 30–70%. This creates a buffer where the base price is adjusted upward according to the segment’s expected elasticity.
• Package Differentiation (Good-Better-Best):
A common approach mentioned is the “Good-Better-Best” model. Here, you create 2–3 tiered packages that target different customer types. These packages group features in a way that meets the primary needs of each segment, avoiding a one-size-fits-all discount strategy. This method helps capture a broader segment of the market by aligning each package with the expected willingness to pay.
• Varied Implementation Strategies:
The book recommends being proactive and creative. For example, you might:
– Develop different pricing pages that clearly communicate the value of each package or tier.
– Introduce special plans or options for customers who require customization or added value.
– Implement sales-negotiated rates, where higher-tier customers (like large enterprises) receive tailored pricing after negotiation, backed by structured discount limits for the sales teams to adhere to.
In practice, as discussed in Price to Scale, the key is balancing transparency with flexibility. By segmenting based on customer behavior and characteristics, you allow room for both standardized online buying and personal negotiation for more complex customers.
In summary, the book advocates for a segmented approach that directly ties pricing and discount strategies to customer type, ensuring that each cohort gets an offer that aligns with their value perception and usage patterns.