CHOICE GAME

Companies such as software-as-a-service (SaaS) suppliers, media companies, and some restaurant chains use techniques from behavioral economics to help their customers self-select from a well-structured lineup. Price differentiation is especially important when offers have limited or no marginal costs. How prices compare to each other is more important than any individual price point.

COST GAME

Companies such as some industrial suppliers, distributors, and government contractors use a cost-plus approach to set prices in commoditized markets with a fragmented base of sellers. Their success depends on achieving greater efficiency, which gives them the degrees of freedom they need to price flexibly and profitably.

CUSTOM GAME

This is the game in those B2B markets which lack large customer segments, common price structures, and standard product configurations. Suppliers succeed by customizing discounted deals with individual customers. The underlying products from each supplier in these highly competitive markets may seem similar, but the negotiated terms, conditions, and supplemental offerings make each deal unique.

DYNAMIC GAME
This game makes sense when a company has adjustable capacity, perishable inventory of relatively undifferentiated products, or constantly fluctuating demand from a broad base of customers. Airlines, sports teams, e-commerce retailers, and logistics firms often fit that description. Many have begun to apply artificial intelligence together with human judgment to share value with customers in real time.

POWER GAME
Players of the Power Game – such as high-tech suppliers – negotiate high-stakes deals in markets with high concentration on the buyer and seller sides. Game theory is the main framework for pricing decisions, because every decision matters and influences other decisions. The offerings in the Power Game often have limited scope for differentiation, which makes even the slightest advantages stand out.

UNIFORM GAME
This game makes sense in markets with a very large number of buyers and relatively homogenous needs, served by numerous comparable sellers. Consumer goods companies and retailers, for example, strive to optimize the same prices for all customers by carefully weighing the tradeoffs between volume and margin. Price elasticity is their key input for making efficient and confident pricing decisions.

VALUE GAME
Players of the Value Game – such as high-tech, luxury goods, and pharmaceutical firms – often have offerings whose economic and emotional value far exceeds what competitors offer. No individual customer or group has significant purchasing power. They use a value-based pricing approach to align the prices of their unique solutions with customer value and then obsessively focus their marketing efforts to defend that value and shape demand.