service pricing

Service pricing refers to the specifics of price management for services.

In western countries like Germany, well above 60 percent of the gross domestic product has been generated in the tertiary sector for years. Service business is often more profitable than new product business, which is why revenue models in service should be on the agenda of top managers. Since many services are more customized than material goods, the relevance of price differentiation is significantly higher and can often be more easily enforced vis-à-vis the end customer. For the price management of services, the following specifics are mainly relevant:

  • The high level of trust and experiential characteristics.
  • The non-storage and non-transferability based on immateriality.
  • The integration of customer resources for service delivery.
  • The unbalanced ratio of variable and fixed costs.
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