Business models as the starting point for digital pricing

The digital transformation has led to significant changes in the business world and presents companies with the task of developing suitable pricing models for their digital offerings. Business models play a crucial role in setting digital prices, as they form the basis for the value customers derive from these offerings. In this article, we explore the various aspects of business models as a starting point for digital pricing and how companies can use them effectively.

Business models in the context of pricing

Digitalization has not only changed the way companies interact with their customers, but also the ways in which they offer products and services. Pricing is critical in this new paradigm, as it reflects the value of digital offerings and helps generate sustainable revenue streams. In this context, business models are the starting point that forms the basis for an effective pricing strategy.      

Business models define how a company creates, delivers and captures value. They take into account aspects such as target groups, value propositions, sales channels and customer relationships. A well-designed business model enables a company to quantify the value of its products and thus provide a basis for its pricing strategy. In e-commerce, the business model directly influences the pricing strategy. Different models such as B2B, B2C, marketplaces or direct sales require different approaches.

Value-based pricing

Value-based pricing takes into account the benefits that a product offers to the customer. For tangible products, it's about quality, durability, and functionality. A high-quality product can justify a higher price if it effectively meets the customer's needs. It requires an understanding of the individual benefits and value a customer derives from a product or service. This requires an accurate analysis of customer needs and the ability to focus on the benefits of the offering.

Example: A manufacturer of high-end smartphones sets its prices based on the special features and exclusive brand positioning. Customers are willing to pay a premium because the product offers unique features.

Dynamic pricing

Meanwhile, dynamic pricing continuously adjusts prices based on factors such as demand, competition and supply. In e-commerce, this can mean adjusting prices based on seasonal trends or sales data to maximize profits. AI and machine learning enable optimal adjustment of prices to maximize revenue.

Example: An online marketplace for flight bookings continuously adjusts its prices based on demand, time of day, and remaining seat capacity. This enables the provider to optimize its revenue.

The role of competition and price monitoring technologies

Competitive and price monitoring technologies are critical to keeping an eye on the market. Technologies such as oraya insights for manufacturers and copio analytics for retailers continuously capture and analyze the pricing of their own distribution network or competitors. This helps companies keep their own prices competitive. The benefits of automated can be summarized as follows:

Optimization of pricing strategy: With the collected data, companies can adjust their own pricing strategy.
Rapid response system: Companies can dynamically respond to competitor price adjustments to maximize sales.
Identification of market trends: Price monitoring enables companies to respond quickly to emerging market trends.

The future of digital pricing will be shaped by advanced technologies such as AI and machine learning. Personalized pricing based on customer data will become increasingly relevant. Therefore, choosing the right business model forms the basis for a successful digital pricing strategy in e-commerce. By taking value-based and dynamic pricing into account and using competitive and price monitoring technologies, companies can optimize their pricing and operate successfully in the highly competitive e-commerce market.