Business Model Generation Playbook

Pricing Model

12 plays

Hand drawn illustration of

Important for this playbook

Pricing is a crucial aspect of any business model as it determines how revenue is generated. There are several different pricing models that businesses can use, each with its own advantages and disadvantages.

Flexible Usage

The “Access over Ownership” and “Freemium” models both offer a form of flexible usage. The “Access over Ownership” model allows customers to access a product or service without the need to own it outright, while “Freemium” allows customers to access a basic version of a product or service for free and pay for premium features. This flexibility allows customers to test out the product or service before committing to a purchase, making them more likely to convert to paying customers in the future.

Additional Charges

The “Add-on” and “Bait and Hook” models both involve additional charges for extras. The “Add-on” model charges customers for additional features or services, while “Bait and Hook” charges for consumables. This allows businesses to generate additional revenue from their products or services, and can be a particularly effective pricing strategy for businesses that sell products that require recurring purchases, such as ink cartridges for printers.

Price Setting

The “Auction,” “Pay What You Want,” and “Dynamic Pricing” models all involve some form of price setting. In an “Auction,” the buyer sets the price, “Pay What You Want” allows the customer to set the price, and “Dynamic Pricing” adjusts prices in response to market demands. These models allow businesses to adjust prices based on supply and demand, and can be particularly effective for businesses that sell unique or limited products or services.

Access over Ownership illustration

Recipe

Access over Ownership

Maximize efficiency with flexible product usage

Add-on illustration

Element

Add-on

Additional charges for extras

Auction illustration

Recipe

Auction

Build community of buyers selling products to the highest bidder

Bait and Hook illustration

Recipe

Bait and Hook

Charge for consumables, not the product

Credits illustration

Element

Credits

Let customers buy or earn credits to postpone actual purchases

Dynamic Pricing illustration

Element

Dynamic Pricing

Adjust prices on the fly in response to market demands

Freemium illustration

Recipe

Freemium

Offer a basic version for free and a premium version for a fee

Pay What You Want illustration

Element

Pay What You Want

Let the buyer set the price

Reversed Bait and Hook illustration

Recipe

Reversed Bait and Hook

Let an expensive product pave the way for cheap or free consumables

Robin Hood illustration

Element

Robin Hood

Take from the rich and give to the poor

Barter illustration

Element

Barter

Exchange goods with customers without a monetary transaction

Cash Machine illustration

Element

Cash Machine

Earn money with negative working capital

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