Does your current Market Price Approach drive frequent AND profitable shopper purchases?


  • Are customers satisfied with the offers and prices you give them OR do they always seem to shop around for better deals and cheaper prices?


  • Do you find yourself giving away large discounts and freebies to either win disloyal customers back or ‘delight’ frequent shoppers?


Finding the right market price approach to suit different customer groups isn’t easy – especially when you’ve got:


      • thousands of products
      • add on services
      • multiple channels to market price approach
      • fierce market competition
      • and several types of customer groups

But did you know that, sometimes, offering customers only 1 standard price for your offers can actually encourage them to price shop from your competitors and overlook the value of your offer?


The no. 1 thing to remember is


People love personalised offers and bundle prices: Price options that can give them the best deals

and more upgrade options when they are ready to buy them.


When a company guides /nudges their customers with prices and offers that address real and specific problems, customers snatch up their offers rather quickly – and not necessarily at the lowest price point. It’s called the GBB or the Good, Better, Best pricing approach.  Known also as tiered pricing.





So, in this article, I will present the various market price approaches to GBB to improve price setting processes, structure and promotional offers. I will start by giving you a quick snapshot of GBB and key market price approaches and principles and then close with some tips on how to integrate GBB within your pricing strategies, structures and operations.


I will argue that GBB can:

  1. Give consumers the best options to meet their needs
  2. Enable businesses to implement value-based pricing


The main contention here is that a 1-price-fits all can often mean losing customers that are willing to buy from you using a high price strategy example like luxury items or points and losing price-sensitive who would have bought more from you at a slightly lower price point.


market price approach


When GBB was introduced


GBB started almost a hundred years ago; when Alfred Sloan used a “price ladder” to gauge people’s response to different prices for automobiles to make a new car pricing strategy. He found out that people were willing to pay more just to have a more comfortable car or upgrade their present car. This finding was a price premium worth billions of dollars for the automotive industry. Since then all automotive pricing strategies have been revised. Ever since then, there has been a wide-scale adoption across multiple industries of the basic, middle, and premium scale – for both pricing strategy and price setting.


Willingness to Pay Market Price Approach


Prior to GBB being introduced, many companies did not believe that their customers would be willing to pay higher prices for their goods and services. For a long time, the underlying assumption ruling pricing decisions was that customers were logical buyers and very price-driven (i.e., they were only interested in the lowest price or large discounts).


Today, however, many businesses realise that they were wrong about their customers on many levels. And that their customers are not just interested or satisfied with low prices. They want value too.


What is Value? value doesn’t just mean value for money. No. Value means offers and deals that fit their budget AND solve their problems too. Customers are also prepared to pay much more than most businesses still believe. However, they’ll only pay higher prices when the offer and pricing for the offer address specific and immediate pain points and needs.


Three approaches to GBB


The GBB is a good way to give customers choices, which not only meet a specific budget but also address immediate and specific pain points.


There are 3 ways to apply GBB:


      • The offensive approach. This approach is suitable when you want to attract new clients and spur capital and business growth. Companies offer the best features of their premium package to lure the present clients to pay more or to attract new high-end customers to try their products. Companies assume customers will first try out the basic option to learn about their products. They also assume they’ll be more willing to pay the higher prices if the premium package is fit-for-purpose and customers are motivated to buy it.


      • The defensive approach. This approach is used when you need to protect a brand’s established place. In essence, the business creates a ‘fighter brand’ to compete in an increasingly competitive market. This could be when a new product is cheaper than the previous brand or when a price war is engaged to counteract a competitor. For example; when an established brand is threatened by an inferior brand and cheaper price; consumers tend to demand more discounts. At this point, a business may introduce another brand similar to the competitor brand to slow consumer demand for discounts and/or prevent their competitors from getting more share of the market.


      • A customer focused approach is when a business wants to use differentiated price points and offers to influence consumer buying decisions. Research shows, for example, that consumers and shoppers like to have clear options presented to them to help them make a choice.  Too many bundles, features, and price points, however, can confuse your customers and they’ll lose interest in your offer. Customers can have this buy/don’t buy attitude when choosing the bundles. You can override customer indecision by developing offers that address a specific pain point or problem. Sephora and Philip Kingley websites are both good examples of value-based offers and good, better best price points.  Personalised personal care and grooming associated with perennial health care issues that they know their customers pay good money to fix.


Tips on how to structure your market price approach


Generally, the GBB responds to the psyche of the consumer. According to the latest research, three options is the ideal amount to have in your price structure. Any more is a distraction; any less is too restrictive.


On the good, better, best market price approach scale, the first is the basic option. The basic ‘good’ offer gives customers the standard features (no frills but still good value). It upgrades; to the other scales. Just what is in the basic option? Will it give them an insight of what’s to come if they upgrade? Does it pique their curiosity? What is the common complaint when they use the basic option?


Fence Attribute


To prevent customers from downgrading their package options, use fence attributes to discourage them. This means fencing off the value they used to enjoy or segregating additional value to better and best options. Never try to give too many freebies away or discount the basic, good package. Discounting ‘good’ options, even more, will only make shoppers demand more discounts and freebies; and depreciate the entire range. Discounts on good options de-value the better and best options as well.




Clearly explain to your customers what they’ll be missing out on if they downgrade.


Try spreading the features through all the three packages. The best features should be in the premium level along with the middle and basic level.


Using the Market Price Approach Test Pilot


Try using a test pilot pricing approach to see what features your customers prefer and categorise to specific customer groups according to the value of your products or services (i.e., price-sensitive, average shopper, high-value shopper). As the test progresses, use a chart or table to analyse the patterns of their preferences. You should be able to see a more detailed picture to then draft your 3 tiered Good, better, and best options.


Just remember to price evenly on the three packages with the lowest to the highest for the premium. This is the good better best-merchandising strategy most businesses use. When using the overcharging pricing strategy or putting the price levels unevenly, some customers may catch the gap and opt not to buy.




  • Fixed pricing coupled with blanket promotions can drive consumers away from businesses; – even if their offers are very good.


  • Consumers often use a single fixed price as a benchmark for comparing it against the competition. And completely forgot, in turn, the reason for the buying.


  • Implementing GBB is not easy.  A world-class pricing team is essential to work on customer price bands, parameters, and fences before implementation.

In Conclusion


GBB is ideal to attract customers at different levels of service. People are willing to pay the increase as long as it gives them a good deal. Pricing your products in one standard will not always attract new customers and can sometimes lead them to your competitors.


People do love bundles and price options but too many can confuse them; they’ll opt not to buy them. By analysing the data from the customer’s preferences, pricing teams can analyse what needs to be improved. With that in mind, they can provide the right pricing tool for the packages.


So do you need a GBB scheme to increase your revenues? You can look for it here, download our free pricing guide or e-book now.


Or, feel free to call me on (2) 91994523


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