Business Models

Digitization enables new business models, additional revenue streams, greater integration of customers into business processes, innovative price models, etc. It affects all aspects of price management and enables innovation across the individual stages of the pricing process. Price optimization for business offerings (e.g., products like game consoles, services like air travel, and digital services like video streaming) is just one facet of digital price management! Important business decisions precede price setting: (1) The definition of revenue sources (the revenue model). (2) The definition of the customer benefit (value to customer) as a central pillar of the business model. Professional price management must go beyond the mere optimization of the pricing process to reflect the higher-level decisions on the business model and the revenue model! If the customer’s subjective value perception is the starting point for pricing, professional price management must necessarily begin with the higher-level business model (level 1). However, the linkage occurs in both directions. Creative pricing measures are one of the numerous examples of this principle. Innovative price models not only lead to better monetization of the benefits (“value capture”), but are also an independent value driver for the customer (“value generation”). Creative price models increase the value to customer (and thus enhance the business model)! So price management is by no means just monetization. Digital pricing can also contribute to value generation.