The-definition.com

Definition

Relationship pricing

Definition (1):

Relationship pricing is the basing fees charged a customer on the number of services and the intensity of use of those services that the customer purchases from a bank.

Definition (2):

Relationship pricing refers to a framework of billing and pricing, in which pricing is determined depending on the whole financial picture of a customer/member, instead of being offered on a product only based on the product. Financial institutions arrange these programs in various ways. One of the ways can be a rewards program, which is a cashback or discount program offered to customers when they have reached a specific spending threshold.

The relationship pricing framework was developed because individuals want the best offer in exchange for their payment, and financial institutions can understand this demand of their customers. Financial institutions should utilize all interactions of their customers as opportunities for further discovering banking requirements and their financial objectives. For example, when a customer includes a spouse to any account, this will be the perfect opportunity for offering information on a value customer rate and mortgages, because soon they may require a home mortgage. It will create a win-win situation because the customer obtains a preferred rate for becoming an existent client, and the financial institution gets a new mortgage.

Share it:  Cite

More from this Section

  • Money markets
    Money markets refer to the financial markets in various countries in which various types ...
  • Mello-Roos
    Mello-Roos is a specific tax levied on residents in some areas to finance bonds that maintain ...
  • Gravestone Doji
    A Gravestone Doji is a candlestick formation generated by negative setbacks whenever the ...
  • Away from us
    Away from us used in context of general equities, to characterize role of a competing ...
  • Back-end value
    Back-end value is a amount paid to the remaining shareholders in the second stage of a ...