Seeded intent and research

research/PricingPatternsAndStrategies.md

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+# Pricing Patterns and Strategies
+
+Prepared for the `adaptive-pricing` project.
+
+## Purpose
+
+This document summarizes common pricing models, pricing strategies, B2B/B2C differences, lifecycle considerations, and implications for building an adaptive pricing framework and implementation platform.
+
+Canonical terminology lives in `PricingOntology.md`. Adjacent research is prioritized in `PricingResearchRoadmap.md`.
+
+---
+
+## 1. Pricing Strategy vs. Pricing Model
+
+### Pricing Strategy
+
+Answers:
+
+> Why should this price exist?
+
+Considers:
+
+- Cost floor
+- Value range
+- Market competition
+- Product lifecycle
+- Customer segments
+- Willingness to pay
+- Growth objectives
+- Margin objectives
+- Risk
+
+### Pricing Model
+
+Answers:
+
+> How is the customer charged?
+
+Examples:
+
+- Flat rate
+- Per-seat
+- Usage-based
+- Tiered
+- Freemium
+- Enterprise contract
+- Credits
+- Outcome-based
+- Hybrid models
+
+---
+
+## 2. Common Pricing Models
+
+### Flat Rate
+
+One product, one price.
+
+Strengths:
+
+- Simple
+- Easy to communicate
+- Easy to implement
+
+Weaknesses:
+
+- Poor segmentation
+- Limited expansion revenue
+- Over- or under-monetization
+
+---
+
+### Per-Seat
+
+Pricing scales with users, employees, agents, or accounts.
+
+Strengths:
+
+- Easy budgeting
+- Familiar to enterprise buyers
+
+Weaknesses:
+
+- Discourages adoption
+- Weak fit for AI-heavy products
+
+---
+
+### Usage-Based
+
+Customers pay for consumption.
+
+Examples:
+
+- API calls
+- Documents
+- Emails
+- Storage
+- Compute
+- Tokens
+
+Strengths:
+
+- Aligns revenue with usage
+- Low entry barrier
+
+Weaknesses:
+
+- Revenue volatility
+- Requires metering infrastructure
+
+---
+
+### Tiered Pricing
+
+Customers select from packages.
+
+Examples:
+
+- Basic
+- Pro
+- Enterprise
+
+Strengths:
+
+- Segmentation
+- Upsell paths
+
+Weaknesses:
+
+- Packaging complexity
+
+---
+
+### Volume Pricing
+
+Unit price decreases at higher volumes.
+
+Strengths:
+
+- Supports large customers
+
+Weaknesses:
+
+- Can destroy margins if discounts are not tied to commitments
+
+---
+
+### Graduated Pricing
+
+Each volume band has its own price.
+
+Strengths:
+
+- Smooth incentives
+- Fairer than pure volume pricing
+
+Weaknesses:
+
+- More complex to explain
+
+---
+
+### Stairstep Pricing
+
+Quantity ranges map to fixed prices.
+
+Strengths:
+
+- Predictable billing
+
+Weaknesses:
+
+- Threshold effects
+
+---
+
+### Package / Credit Pricing
+
+Customers purchase blocks of units.
+
+Strengths:
+
+- Budget control
+- Commitment generation
+
+Weaknesses:
+
+- Breakage and accounting complexity
+
+---
+
+### Freemium
+
+Free tier with paid upgrades.
+
+Strengths:
+
+- Acquisition
+- Viral growth
+
+Weaknesses:
+
+- Infrastructure burden
+- Conversion challenges
+
+---
+
+### Trial Models
+
+Temporary access before purchase.
+
+Strengths:
+
+- Reduces uncertainty
+
+Weaknesses:
+
+- Abuse potential
+- Activation challenges
+
+---
+
+### Enterprise / Custom Pricing
+
+Negotiated pricing.
+
+Strengths:
+
+- Flexible
+- Captures high value
+
+Weaknesses:
+
+- Sales overhead
+- Discount sprawl
+
+---
+
+### Outcome-Based Pricing
+
+Customer pays based on achieved outcomes.
+
+Examples:
+
+- Revenue generated
+- Cost saved
+- Tickets resolved
+
+Strengths:
+
+- Strong value alignment
+
+Weaknesses:
+
+- Attribution disputes
+
+---
+
+### Hybrid Pricing
+
+Combination of multiple pricing mechanisms.
+
+Examples:
+
+- Subscription + Usage
+- Platform Fee + Transaction Fee
+- Minimum Commitment + Usage
+
+Strengths:
+
+- Flexible
+- Increasingly dominant
+
+Weaknesses:
+
+- Greater implementation complexity
+
+---
+
+## 3. Pricing Strategies
+
+### Cost-Plus
+
+Price = Cost + Margin
+
+Useful for establishing a cost floor.
+
+---
+
+### Value-Based
+
+Price reflects customer value.
+
+Useful for maximizing economic alignment.
+
+---
+
+### Competition-Based
+
+Price references alternatives in the market.
+
+Useful for positioning.
+
+---
+
+### Penetration Pricing
+
+Low entry pricing to gain adoption.
+
+Best suited for:
+
+- Exploration
+- Introduction
+
+---
+
+### Premium / Skimming Pricing
+
+High initial pricing.
+
+Best suited for:
+
+- Strong ROI
+- Low competition
+- Urgent customer pain
+
+---
+
+### Good-Better-Best Packaging
+
+Multiple tiers designed to segment willingness to pay.
+
+---
+
+### Dynamic Pricing
+
+Prices adapt to:
+
+- Demand
+- Capacity
+- Market conditions
+
+Requires careful governance and explainability.
+
+---
+
+### Personalized Pricing
+
+Prices vary by customer.
+
+Benefits:
+
+- Revenue optimization
+
+Risks:
+
+- Trust
+- Fairness
+- Regulation
+
+---
+
+### Segmented Pricing
+
+Different pricing for different customer categories.
+
+Examples:
+
+- Individual
+- SMB
+- Enterprise
+- Education
+- Nonprofit
+
+---
+
+### Lifecycle Pricing
+
+Different strategies across:
+
+1. Exploration
+2. Introduction
+3. Growth
+4. Maturity
+5. Saturation
+6. Decline
+
+---
+
+## 4. B2B vs B2C
+
+### B2B
+
+Primary concerns:
+
+- ROI
+- Procurement
+- Predictability
+- SLA
+- Compliance
+- Integration
+
+Common models:
+
+- Seat-based
+- Usage-based
+- Enterprise contracts
+- Hybrid models
+
+---
+
+### B2C
+
+Primary concerns:
+
+- Simplicity
+- Trust
+- Immediate value
+- Easy cancellation
+
+Common models:
+
+- Subscription
+- Freemium
+- Family plans
+- In-app purchases
+- Bundles
+
+---
+
+## 5. Implications for adaptive-pricing
+
+Pricing should be represented as composable primitives.
+
+Examples:
+
+- Access fee
+- Usage meter
+- Commitment
+- Discount rule
+- Risk adjustment
+- Lifecycle phase
+- Segment rule
+- Boundary condition
+- Payment-provider mapping
+
+Pricing should be modeled independently from Stripe or other payment providers.
+
+Payment providers execute pricing artifacts.
+
+The adaptive-pricing engine owns:
+
+- Model definition
+- Constraints
+- Simulations
+- Recommendations
+- Explanations
+- Versioning
+
+---
+
+## References
+
+- Stripe Billing Documentation: https://docs.stripe.com/
+- Paddle Pricing Guides: https://www.paddle.com/blog/
+- Chargebee Billing Documentation: https://www.chargebee.com/docs/
+- Reuters coverage on algorithmic pricing regulation: https://www.reuters.com/
+- Research on trial subscriptions: https://arxiv.org/
+- Nature Index article on psychological pricing: https://www.nature.com/