You can use pricing segmentation to drive your business’s sales and profits.
It had to happen sooner or later: Samoa Air has announced that they will sooner begin charging customers based on weight.
Is this fair? Most consumers would think not. (Though of course their opinion might be swayed based on how impacted they would be by it.)
Discriminatory (or segmentation to use the proper term) pricing is nothing new. Grocery retailers will often charge different prices depending on a store’s customer base and level of competition. Up until recently car insurance companies have historically charged more to male drivers based on statistical risk. Cinemas regularly offer discounts to daytime screenings to try and fill seats.
I’ve no doubt that many will be quick to criticise Samoa Air for their new pricing policy. However, at least take a moment to commend them for being innovative and daring. There is a lot of opportunity for innovation in pricing. Whether it is pricing a product or service differently by geography, time of day or age you should always consider how segmented pricing could be utilised in your business.
Do you operate a service-focussed business, such as, a restaurant, that suffers from peak and off-peak trading patterns? Could you use pricing segmentation to boost those off-peak trading hours? Are you a specialist retailer who could benefit from a membership scheme that offers two prices per product: one for members (the lower price) and one for the non-member.
The takeaway here is to remember that pricing shouldn’t always stop with the single price. Try and think of ways that pricing segmentation could be used to maximise your sales and profits. And if you need any more evidence that pricing segmentation is a good thing than look no further than this video.