Chapter Objectives
          •     Discuss the concept of perceived value as it pertains to comparing 
                total customer cost to total customer value.
          •     Understand the special considerations of service pricing as they 
                relate to cost, demand, customer, competitor, profit, product, and 
                legal considerations.
          •     Discuss the pros and cons of using cost-based pricing in service 
                pricing decisions.
          •     Discuss the circumstances under which price segmentation is most 
                effective.
          •     Explain satisfaction-based, relationship, and efficiency approaches 
                to pricing and provide examples of service firms that are using each 
                of these pricing strategies.
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                  © 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
                                                         Opening Vignette: 
                                       Pay What You Can Restaurants
          •     The “Pay What You Can” movement began at Salt Lake City’s One 
                World Café more than 12 years ago
          •     Denver is now home to three such restaurants
          •     Customers can pay for their meals with cash or labor, or nothing at all
          •     The business model is simple: 
                  – Feed all customers, regardless of their ability to pay
                  – Ask those who can afford it to contribute a little more to help others
          •     There are no set prices on the menu
          •     These restaurants bring together people from all walks of life, rather 
                than only the poor 
          •     Entrepreneurs around the country are considering opening these 
                restaurants
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                  © 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
                                              The Art of Pricing
          • Pricing policy is the last stronghold of 
                medievalism in modern management…[Pricing] 
                is still largely intuitive and even mystical in the 
                sense that the intuition is often the province of 
                the big boss (Dean, 1947)
          • Pricing is approached in Britain like Russian 
                roulette—to be indulged in mainly by those 
                contemplating suicide (Chief Executive, 1981)
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                  © 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 
                                                           Figure 6.1: 
                                      Buyer’s Perception of Value
                                    ®
          © 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or 
                                                                    in part. 
              Figure 6.2: Unique Differences Associated with 
                                                       Service Prices
                                    ®
          © 2017 Cengage Learning . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or 
                                                                    in part.