Pricing Flashcards
Lesson 9 (15 cards)
What are the two main monetization strategies for platforms?
Pricing and Complementary revenues
Pricing involves charging users for the value they receive, while complementary revenues involve charging third parties for access to users.
What does pricing on platforms reflect?
Users’ interdependence in value co-creation
Pricing must consider how users interact and rely on each other.
What are examples of complementary revenues?
- Advertising
- Data monetization
- Affiliate marketing
What is the main complexity in price setting for platforms?
Interdependence of user due to network effects
The price of a group is linked to the price of the pther one.
What is leverage-based pricing?
Pricing strategy based on the leverage that users exert when on the platform
It takes into account the interdependent nature of user participation.
What is the basic principle behind leverage-based pricing?
Set lower prices for users that are more costly to acquire and/or exert larger attraction power
This approach ensures that pricing reflects the value users bring to the platform.
What are the types of fees used in regulating ACCESS to a platform?
- Membership fees
Membership fees are typically paid regularly,independent of the usage
What are the types of fees used in regulating ACTIVITY to a platform?
- Transaction fees
What is same-side differential pricing?
A strategy where users self-select based on a menu of pricing options
This tactic aims to optimize revenue and leverage network effects.
What are the challenges associated with membership fees?
- Providing high value
- Exacerbating the chicken-and-egg problem
Users must see enough benefit to justify the membership cost.
What is the risk associated with advertising on platforms?
Negative cross-side network effects due to user dislike of ads
Users may leave the platform if they feel overwhelmed by advertisements.
What are the two sources of revenue for platforms?
- Users (pricing)
- Other users (complementary revenues)
This dual revenue stream allows platforms to diversify income sources.
What does the price mix in platform economics refer to?
The combination of different pricing strategies such as membership and transaction fees
A well-structured price mix can enhance user participation and revenue.
Fill in the blank: Platforms must charge one group of users less than the other if the group has a relatively larger _______.
attraction power
and are costly to aquire.
True or False: Platforms should set prices independently for each user group.
False
