ABSTRACT
Time- and loyalty-based pricing is ideal for relationships between a company and a customer that are based on contracts, as the length of relationship can be measured and discounts be determined. Multi-step quantity discounts offer increasing discounts at higher purchase levels. The effect of such a multi-step discount programme is that it encourages increased purchases, as the next discount level is easily attainable. Here, the loyalty programmes are aimed at the additional participants as well as the main purchaser. The loyalty effect is very strong, although additional action will be required at the end of the agreement. With multi-product pricing, the strongly discounted sale of the main product is linked to a longer-term agreement to purchase complementary products or services exclusively from that supplier, such as buying a copier at a discount and agreeing to purchase toner cartridges, paper and services in return. Contracts and exclusivity agreements are, of course, another form of loyalty scheme.
