Channel pricing refers to the practice of setting different prices for a product or service depending on the sales channel through which it is sold. For example, a business might set a higher price for a product when it is sold through a brick-and-mortar retail store compared to when it is sold online through the company’s website. Channel pricing can be a useful way for businesses to differentiate their products and to adjust their prices to reflect the costs and benefits of different sales channels. For example, a company might set higher prices for products sold through brick-and-mortar stores to reflect the higher overhead costs associated with operating a physical retail location.
Some examples of channel pricing in action include:
- A clothing manufacturer setting higher prices for its products when they are sold in department stores compared to when they are sold in the company’s own outlet stores
- A software company offering a lower price for its products when they are purchased through its website compared to when they are purchased through a third-party retailer
- A restaurant offering different prices for its menu items depending on whether they are ordered in the restaurant, for takeout, or for delivery
In each of these cases, the business is using different prices to reflect the differences in the costs and benefits associated with different sales channels. By doing so, they can better align their pricing with their overall business objectives and can potentially maximize their revenue and profits.