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Why Progressive Pricing Is Becoming a Competitive Necessity
Article

Why Progressive Pricing Is Becoming a Competitive Necessity

Jean-Manuel Izaret and Just Schürmann
Boston Consulting Group, 2019
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Jean-Manuel Izaret and Just Schürmann, two senior partners at the Boston Consulting Group, ask you to imagine that your firm “could measure, customize and charge for – in real time – the value your products or services create for each customer.” Then they reveal that what seems an impossible idea is already a reality. Learn what “progressive pricing” is (and isn’t), and what four changes every firm must make to adopt this “competitive necessity.” 

Summary

Economic tradition posits a single, undifferentiated price for all who buy a product or service. Now “progressive pricing” is challenging that tradition. Progressive pricing increases or decreases according to the value a customer gleans from the offering. Customers knowingly pay for a certain “level of value.” Soon, firms won’t have a choice in whether to adopt progressive pricing. The provider–consumer relationship is evolving toward measuring “discrete customer value,” making progressive pricing inevitable. Moreover, firms today can innovate at no marginal cost. Instead of upgrading physical products, they create...

About the Authors

Jean-Manuel Izaret and Just Schürmann are senior partners and managing directors at the Boston Consulting Group.

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