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Lifetime Pricing

 

DisciplinesMarketing > Pricing > Lifetime Pricing

Description | Example | Discussion | See also

 

Description

Set prices based on the lifetime cost of ownership and value created. Include cost of failure, where failure includes not only repair cost but other factors such as cost of lost business as a result of the failure. Other factors include costs for training, upgrade, disposal costs, etc.

Price such that a sales person might persuade a customer to buy by demonstrating that the lifetime cost of ownership is much lower than that of competing products.

Example

A computer package includes same-day service, RAID redundancy and other value-creating attributes that lets the provider increase the price as as they sell it as a highly reliable system.

A tool manufacturer promotes their products' toughness, justifying the higher price of their goods.

Discussion

Lifetime pricing is generally used to justify higher prices, though lifetime consideration may lead to pricing at a low point, for example with disposable goods.

When people buy things they often do not consider what further costs they may meet in the future. Cheap products can seem to be good value, yet if they break easily or do not offer adequate functionality, then they can turn out to be rather poor value.

When you use lifetime pricing, you may have to put extra effort into selling, with adverts that promote the lifetime value and personal, one-to-one selling.

See also

Benefit Pricing

 

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