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Pricing on the net

We know more or less what a pint of milk or a bus fare ought to cost, but on the internet, there are no obvious prices. Pricing is one of the biggest mysteries in business, and especially for new services like digital media. How do you charge? And for what? Pricing new digital media has traditionally revolved around two central phenomena, which I call relative pricing and alternative sources of income.

Relative pricing

With relative pricing, one product can cost one thing in one place, while it costs less or is offered free somewhere else in an effort to attract customers. The price is what a buyer is willing to pay for a product or service, and this is often determined by what it costs elsewhere, and the fact that a buyer normally wants to pay as little as possible. The typical example is the web bookstore that attracts customers from the bookstore on the high street by offering lower prices.


  

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