Initially, this pricing strategy was applied to the relationship between the rate of work and the cost of work: for instance, employees are paid more when they work faster. In the retail industry, time-based pricing has a different meaning. This approach implies correcting prices over a certain period of time. Most likely, you’ve encountered it when shopping for clothes and seasonal products.
Parking meters are a good example of a time-based pricing model. For instance, parking lot owners can raise prices during the busiest times, when there are many customers. At the same time, they can charge less on the weekends and after work.
The following sectors employ time-based pricing most frequently:
- Airlines. We all know that it is a better deal to buy tickets in advance, while same-day or next-day tickets are very costly.
- E-commerce. Prices in the industry are greatly influenced by the time of year and the day of the week – they mainly depend on seasons.
- Ride-hailing. In this industry, prices vary according to the weather and the level of demand.
- Holidays, special occasions, and events affect prices – sellers charge more when people rush to buy presents, decorations and so on.
These examples highlight the flexible nature of time-based pricing. This approach stresses external factors, whereas value-based pricing concentrates on providing value to customers.