The Price and Fashion of Models

Pricing models are relatively fixed. We are used to paying for a car either by cash or credit/loan. We pay a set price for a bottle of wine. We pay our house electricty bill by usage per month. We pay our car gas bills by the litre or gallon when we fill up. It’s incredible hard for an established business to change the way it charges for its goods or services. The “software as service” companies are most usually the established players. For example you can buy a project management program from Microsoft but you pay monthly for access to the project management website of 37Signals or SalesForce,

However things are changing. Daily car useage for years was basically you buy a car and you pay when you fill it up and when you repair it. Rental and leasing are also two popular models but not really a long-term option. You usually own your car and rent one (per day) when you go on vacation to another country. Car Clubs though are taking ground. They offer a local car that is shared between local residents. You often pay by the hour and petrol is usually included. These businesses, like the City Car Club in Edinburgh, have two aims: reducing the number cars for environmental concerns and offering a service that some people genuinely need. The idea is that if you only occasionally need a car then why not just pay when you need it and not when you don’t. If you only use a car 2 or 3 times a week you might be much better off financially (not to mention your carbon footprint) if you share that car with other people in the same situation.

One industry that has for years, since the 1960s had a certain model is the legal profession. Lawyers charge by the hour. However this article in the New York Times suggests there may be a shaft of light here. For the business I’m involved in we have excellent lawyers. We’re happy with the service but we don’t like to call them since we know any extra work they do will be billed by time. A contract for services or price per finished job might go some way to helping the model. Some law-firms have already done this.

Have you seen any bizarre or intriguing pricing models recently? Any new ways of offering services? Feel free to post in the comments

Just to end check out Graze. This company delivers dried fruit to your office desk 3 or 4 times a week. For those that like to snack, but want to avoid going down to the local shop and being tempted to buy chocolate.