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With inflation high, a global recession possible, and consumers spending carefully, many companies are concerned about preserving profit margins. In this article, pricing consultant Rafi Mohammed argues that instead of simply adjusting prices, firms should consider adding new ways to charge customers. He outlines 18 different pricing tactics that can be used for various purposes: to accommodate buyers with different usage needs, to appeal to people on a tight budget, to spur purchases by customers who love a good deal, to achieve favorable prices when the value of an offering is uncertain, and to increase business efficiency. Mohammed urges companies to think creatively about whether a pricing convention commonly used in other industries might work for their own product or service. For example, Allstate has borrowed the metering model and introduced auto insurance premiums based on actual miles driven. Mammoth Holdings, which owns more than 100 car washes, offers monthly subscriptions for unlimited washes. Some hotels sell day passes to their pools and fitness facilities. By creating a mix of pricing options, companies are likely to please existing customers and attract new ones.

Companies often crimp profits by using discounts to attract price-sensitive customers and by failing to give high-end customers reasons to spend more. A multitiered offering can use a stripped-down product (the "Good" option) to attract new customers, the existing product ("Better") to keep current customers happy, and a feature-laden premium version ("Best") to increase spending by customers who want more. There's nothing new about this concept, of course--think of the different grades of fuel at any gas station and the varying packages marketed by cable TV providers, to name just two examples--yet many companies and industries have failed to embrace it. The author, a consultant who has helped many organizations adopt G-B-B pricing, presents a step-by-step guide to devising, testing, and launching the strategy. Key steps include identifying "fence" attributes that will prevent current customers from trading down from the existing offering; carefully choosing features and names to create clear differentiation and value; and setting prices using feedback from in-house experts and, when possible, drawing on conjoint analysis and other market research.

During the recession, companies like Procter & Gamble, Hyundai, and Best Buy used adaptive pricing strategies, such as introducing lower-priced versions of products and adapting products to maintain affordability, to avoid across-the-board price cuts that can be difficult to reverse later. Now, as we wait for the economy to return to full speed, smart companies will learn from these strategies and develop plans to help their own businesses regain lost ground.