Pricing Models & Tools Flashcards

Which pricing model charges customers a recurring fee regardless of usage volume?

Answer: Flat-rate subscription pricing

Flat-rate subscription pricing charges a fixed recurring fee independent of how much the customer uses the product.

In a Conjoint Analysis, what does 'part-worth utility' represent?

Answer: The marginal value assigned to each attribute level

Part-worth utilities quantify the relative value each attribute level contributes to overall customer preference.

A company uses a 'price waterfall' analysis. What does it primarily reveal?

Answer: How list price erodes to realized price through discounts and allowances

A price waterfall maps every discount, rebate, and allowance that reduces list price down to the actual pocket price.

Which tool is best suited for identifying the price at which revenue is maximized given a known demand curve?

Answer: Price optimization software with demand modeling

Price optimization software uses demand modeling to identify the revenue-maximizing price point on a demand curve.

In a two-part tariff pricing model, revenue comes from:

Answer: A fixed access fee plus a variable usage charge

Two-part tariffs combine a fixed entry fee (e.g., membership) with a per-unit usage charge.

What is the primary purpose of a 'price sensitivity meter' (Van Westendorp) in pricing research?

Answer: To identify an acceptable price range using four price-perception questions

The Van Westendorp Price Sensitivity Meter uses four questions to define the range of acceptable prices in customers' perception.

A SaaS company moves from per-seat pricing to usage-based pricing. Which outcome is most likely?

Answer: Revenue predictability decreases but expansion revenue potential increases

Usage-based pricing reduces upfront revenue predictability but allows revenue to grow naturally as customers use more.