What Is Relationship Pricing?
Also known as relationship based pricing or RBP, relationship pricing is a type of rate structure that is extended to existing customers who choose to purchase goods or services that are ancillary to the core products offered by a company or firm. The idea behind this type of pricing is to allow the business to broaden ties with existing customers by offering them more of the products they desire, at prices that are highly competitive in the marketplace. Doing so helps to increase customer loyalty as well as improve the revenue stream generated by the business.
A simple example of relationship pricing can be found in the banking industry. Along with the core products of checking and savings accounts, most banks today will also offer customers the opportunity to purchase insurance or buy stocks and bonds through specialized departments within the institution. Some banks will also operate a realty division that provides existing bank customers with the ability to finance a mortgage at a lower rate, based on that existing business relationship. Using this approach minimizes the chances that the bank customer will look elsewhere in order to manage his or her financial transactions, since the expanding range of services meets those needs and allows for a simple one-stop shopping experience for the customers.
The concept of relationship pricing is also utilized in other settings, such as the offering of business services. A teleconference company may offer its audio conference clientele easy access to video conferencing services, fax and email broadcasting, or even discounted long-distance rates through a series of vendor partners. This relationship pricing approach allows the company to broaden the suite of services that generates profits for the business while also strengthening ties with its client base. The ability to offer a wider range of services is also helpful in sales and marketing efforts that are aimed at attracting new customers.
For consumers, the benefits of relationship pricing often focus on the ability to secure goods and services at prices that may be hard to lock in elsewhere. At the same time, the convenience of the approach is often a key factor. For example, a bank customer will often receive a single monthly statement that details activity on all of his or her accounts, rather than a series of statements from multiple providers. The online banking process is often simplified, making it possible to move money to or from an investment account into any of the other accounts, pay the mortgage with a transfer from a checking account, or any other combination of transactions involving the accounts of that particular customer.
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