It is easy to think of pricing as merely a mechanism for higher revenue and to have with it, a rather detached view of how pricing strategies should be developed. Yet fundamentally, for the firm to get its pricing right, individual buyers must be willing to pay for a service. The market demand for a service must therefore, at the base of it, consist of buyers willing to part with their money to pay for the service. In fact, there must be a sufficient number of such buyers willing to do so for the firm to be able to cover its costs and turn in a profit.

In the previous chapter, I discussed the expected outlays for a buyer considering the purchase of a service, and the pressure that this exerts on price. Many of the outlays are those expected at the point of consuming the service. This chapter examines the risks faced by buyers at the point of purchase which, as I will show, could be well in advance of consumption. The separation between the purchase and consumption of a service would have severe pricing implications.

Firms develop pricing strategies with the aim of achieving higher revenues. To do so, it is important that they understand what value means to the buyer, and the role of the ENV framework in pricing strategies, as discussed in Chapter 2. More specifically, the pricing of services has to take into account the separation of purchase and consumption which would have an impact on pricing, as explained in Chapter 3.