Value Based Pricing

Indigo Airlines

Presented To:- Jishnu Changkakoti

Presented By:- Ansh Kamboj
Debjit Bisai
 Value Based Pricing
• Value based pricing is a pricing strategy where companies
decide the price of their product as per the customers
perceived value of a product or service, Through this we
can set a pricing according to different customer
segments and their needs.
• Many companies in India follows the value based pricing
model to cater different market segment. This helps the
companies to cater more market share in the overall
market in the economy.
• In an airline, value-based pricing mean that the Indigo
airline sets its ticket prices based on what passengers are
willing to pay for the value they receive from the flight.
 Pros of Value Based Pricing
• Value based pricing helps customers purchase the product
as per they're affordability.
• Value based pricing also helps to increase better customer
experience.
• It create a product as per customer needs and
requirements, it also helps to increase profit margin of that
particular product.
• Now taking the example of Indigo airlines, it has First Class
seats for premium/rich class and Premium Economy seats
for upper middle class and Economy for the middle class.
Customer can choose the seats as per their
budgets/capacity.
 Cons of Value Based Pricing

• Value based pricing method is difficult to set a product or service

price, basically when new startups are launched a product in the
market they are facing challenges to set a product value.
• Another main disadvantage of value based pricing is more
competitive in the market.
• E.g.: when a company launched their product price as per value based
pricing but also their competitors also launched the same product
with a low price at that time it's difficult to get a good sales.
Need of Value Based Pricing in Indigo Airlines
• As customer willing to pay more for the
services and vice-versa, there is a need
for the value based pricing in Indigo
airlines.
• Also if there is equal pricing for all
customers or any other method use by
Indigo airlines it would loose trust and
all customers will tend towards best
seat in the flight. This will lead to chaos
in generating the feedback what
customer really wants.
• Value Based Pricing is needed to
differentiate the customers segment
and preferences.
Target Customer Segment By Indigo
Airlines
• The main target of
customer segment by
Indigo Airlines is the
middle class. As it is
considered as budget-
conscious flight for
passengers in India.
• It also caters the upper
class passengers/travellers
by providing differentiated
service/seats such as First
Class/Business Class.
 Differentiation of service in Indigo Airlines

• In First Class/Business Class, the airline provide more leg

space, more baggage, more complimentary services and
are given preference before the economy class
passengers/travelers. This gives the airline to charge
higher price that it charges.
• The premium class passengers/travellers get the free
snack combo of their choice and more food/ meals
options provided with zero convenience fee.
• In economy class, passengers/travellers get the
comfortable seat and no additional services are
provided to them without charging the convenience
fees.
Thank You