pricing model

A pricing model describes how a company monetizes its goods or services and includes information about the price base and price structure across all steps of the price waterfall.

A pricing model is an essential component of a successful business model. For this reason, new pricing models such as pay-per-use or the so-called freemium have been developed in recent years in the context of new business models. With pay-per-use models, a customer only pays for the actual service used. An example of this are Car-Sharing providers that charge for their services per kilometer driven or minute used. In Freemium models, a basic version is offered free of charge, whereas a premium version with additional functions requires extra payment. One example is the ad-free premium version of the streaming provider Spotify.