chapter  11
16 Pages

Platform pricing

The competing platform may seek to provide superior pricing innovation or competition among producers, greater flexibility for producers to differentiate their product/level of service, or improved customization and negotiation options for users. Some platforms have a membership fee and a transaction fee to both encourage recurrent purchases and get some volume-related revenues. Platforms can also use such pricing strategies to differentiate their customer community vs. other platforms based on the 'average value' of users. A platform architect must consider not only the impact of the platform's own pricing strategies on interactions, but also the impact of producers' pricing structures. However, the right pricing strategy can generate tremendous value while supporting the strategic objectives of the platform. The pricing strategy process can end up being quite complicated for traditional businesses, yet it is often much simpler than pricing for platform businesses.