How we change what others think, feel, believe and do

Private Pricing

Disciplines > Marketing > Pricing > Private Pricing

Description | Example | Discussion | See also

Description

Price separately for each individual customers. Do not publish a price list (or, if you must, be clear that this is only indicative). Do not tell other people what you charged prices.

Base the actual price on a range of contextual factors such as:

• How price sensitive the customer seems to be.
• Whether they seek to negotiate the price and how prepared they are (for example in knowing competitor prices.
• The loyalty of the customer and whether you want to price this as a 'special' for them.
• Your need to protect the brand, for example by keeping the price high to indicate exclusivity.

Example

A shop selling high-end fashion items does not have price tickets. They have a private price range and will vary the actual price charged based on the loyalty of the customer and a dynamic assessment of their price sensitivity.

A steel parts wholesaler only publishes a standard price list as an indicator. In practice all orders are negotiated. They are careful not to let these prices be known as this would lead to poorer negotiators suddenly demanding a greater discount.

Discussion

A reason why prices are standardised is in order to create interest that gets people to come to you with an expectation of what they will pay and very likely without considering negotiating. This is common in standard retail markets. Such customers compare prices before they even approach you. Private pricing is not suitable in these situations.

Private pricing is effectively common in business-to-business sales, where negotiation is common. Even if there are 'standard prices' these are indicative only and commercial buyers almost always expect a discount, especially if they are regular customers or if they are placing a larger order. Companies do not want the prices they negotiate to be known as this may affect negotiations with other customers.

Private pricing is also used in high-end retail where customers are not price-sensitive. indeed, such customers may even not notice the price. All they need to know is that it is 'reassuringly expensive' and perhaps that the seller is not taking advantage of them. They often consider money as 'below them' and discussions about price as rather vulgar. It hence helps these customers if the retailer keeps prices private.

See also

Premium Pricing, Negotiation