A hat tip to Phil Wheeler for spotting this great example of pricing strategy - as mobile network operators grapple with the challenge of setting competitive, but fair pricing for the increasingly amount of mobile bandwidth we are all using.

The idea of tiered pricing is discussed. Whilst that term isn’t one which you’ll find in the current business textbooks, it is a concept which students can probably handle. In essence tiered pricing is about customers paying for the level of service they require. For example, how much bandwidth they want to be able to use in a given period. As the Vodafone executive is quoted:

“The principle here must be that, a bit like motorways or hotels, every class of service must have its own price and customers must be able to pay for whatever level of service he or she wants - we cannot penalise those who pay more.”

A good class exercise would be to ask students to identify a range of services where tiered (or service level-based) pricing already exists, and also where it might be introduced.