Optimizing Revenue through Pricing Strategies PPT

This PPT slide, part of the 159-slide Strategy Frameworks Manual PowerPoint presentation, presents a comparative analysis of pricing strategies, specifically focusing on single pricing versus multiple price structures. On the left side, the single price model is illustrated, where a product is priced at £200, with a fixed cost of £100. This model highlights 2 key issues: the concept of 'consumer surplus,' which refers to potential profit lost because some customers are willing to pay more than £200, and 'dead weight loss,' which indicates business that could have been captured from price-sensitive consumers who would purchase at a lower price.

The graph accompanying the single price model shows that while total profit is maximized at a certain volume sold, there are segments of the market that remain untapped. This results in a loss of potential revenue from customers who value the product higher than the set price, but are not incentivized to purchase.

On the right, the multiple price model is introduced. Here, the company can charge different prices—£250, £200, and £150—based on customer willingness to pay. This strategy allows the business to capture more value from less price-sensitive customers while also appealing to more price-sensitive segments. The slide notes that some customers who previously paid £200 may now be willing to pay £250, thus increasing overall profit. Additionally, those who would not buy at £200 can be attracted at a £150 price point, leading to increased sales volume.

The insights from this slide suggest that employing a multiple pricing strategy can effectively enhance revenue by better aligning prices with customer value perception.

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