Pricing of services - Marketing Management

Lancaster and Withey suggest that the basic methods of price determination and alternative pricing strategies, such as market skimming versus market penetration, apply equally to services. You will recall that the perishability of services means that the careful matching of demand and supply is crucial. Because of this, we should expect to find that a much more flexible approach to pricing and margins is appropriate for services. Differential pricing with different prices for different market segments is widely used in the pricing of services to try to ensure a matching of demand and supply. We should also note that the intangible nature of service products also tends to heighten the use by customers of price as an indicator of quality.

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