Exchange
Understanding how goods and services can be exchanged under contributionism
Last updated
Understanding how goods and services can be exchanged under contributionism
Last updated
Contributionism could be implemented across different economic models, with various approaches for exchanging goods and services.
Markets are currently the most prominently adopted approach for exchanging goods and services across the world.
Market exchange is a system in which the production, distribution and pricing of goods and services is determined primarily by supply and demand in competitive markets.
Prices act as signals for both producers and consumers, and voluntary exchanges take place in markets based on these price signals.
Individuals and businesses make their own economic choices about what's goods and services to provide and how they will be priced. Prices are determined by the forces of supply and demand, serving as a signal for what to produce, how much to produce and who receives goods. Individuals and businesses compete in the market to provide goods and services efficiently.
In a market based economy, governments are often responsible for regulating the market and resolving any market failures, enforcing contracts and protecting property rights. More information about market failures can be found here:
Market based economies have a variety of different pricing approaches that are commonly used when exchanging products and services. These same pricing approaches would be relevant and applicable for contributionist organisations that operate in a market based economy.
Cost-based pricing
Cost-plus pricing - The price is set by adding a fixed percentage or markup to the cost of producing the product or service.
Markup pricing - A specific amount or percentage is added to the cost of the product to determine its price.
Break-even pricing - Price is set to cover costs and reach a break-even point, without aiming for profit initially. This can be a common approach when entering new markets.
Value-based pricing
Perceived value pricing - Price is set based on the customer’s perception of the value of the product or service, rather than the actual cost of production.
Willingness to pay (WTP) pricing - Prices are determined by what customers are willing to pay, often through surveys or market research.
Premium pricing - Products are priced higher to reflect their superior quality, brand reputation or uniqueness.
Competition-based pricing
Going-rate pricing - The price is set according to what competitors are charging for similar products.
Competitive parity pricing - Prices are set to match competitors, often to avoid price wars.
Loss-leader pricing - A product is sold at or below cost to attract customers, with the hope that they will purchase other higher-margin items.
Dynamic pricing
Demand-based pricing - Prices fluctuate based on real-time demand, such as higher prices during peak seasons or due to popular events.
Surge pricing - Similar to demand-based pricing but with more extreme adjustments based on sudden increases in demand. This is commonly used by ride-hailing services like Uber.
Time-based pricing - Prices vary depending on the time of purchase, such as discounts for early bookings or increased prices during rush hours.
Psychological pricing
Charm pricing - Prices are set slightly below a round number (e.g. $9.99 instead of $10), which can make them seem lower to customers.
Prestige pricing - Prices are set higher to signal luxury or exclusivity, which may attract status-conscious buyers.
Anchor pricing - A higher "reference" price is displayed next to a discounted price to make the latter seem like a better deal.
Geographical pricing
Zone pricing - Different prices are charged based on the geographical location of the buyer, for example applying higher prices in urban areas.
Freight-on-board (FOB) pricing - Prices vary based on shipping costs. Buyers in distant locations would pay more.
Negotiation pricing
A negotiation determines the maximum price a customer is willing to pay that the seller must also be satisfied with.
Quantity pricing
Different prices are charged based on the quantity purchased or product version.
Demographic pricing
Prices differ for specific customer segments based on demographics (e.g. student or senior discounts).
Penetration pricing
Prices are set low initially to enter a competitive market and attract customers, with the intention of increasing prices once a loyal customer base is established.
Skimming pricing
High initial prices are set for a new product, targeting early adopters, with gradual price reductions over time to reach broader market segments.
Bundle pricing
Several products or services are sold together at a lower price than if they were purchased individually. This can be a common approach with software or fast food chains.
Subscripting pricing
A recurring fee is charged for continuous access to a product or service, commonly used by software-as-a-service (SaaS) platforms, streaming services and magazines.
Freemium pricing
Basic services or products are offered for free, while more advanced features or premium versions are charged at a higher price (e.g. mobile apps or software services).
Pay-what-you-want pricing
Customers are allowed to choose the amount they want to pay for a product or service, with some firms suggesting a minimum or average price.
Performance based pricing
Pricing is based on the results or outcomes delivered. Common in consulting, advertising (e.g. pay-per-click) and commission-based services.
Auction based pricing
Prices are determined through bidding processes, as in traditional auctions, reverse auctions, or online platforms like eBay. Each customer is charged the maximum price they are willing to pay.
Economy pricing
Prices are kept low by minimising marketing and production costs, often used for generic or low-cost goods like store brands or no-frills services.
Seasonal pricing
Prices are adjusted depending on the time of year, with higher prices during peak seasons (e.g. holidays) and lower prices during off-peak periods.
Hybrid pricing
A combination of different pricing models is used to fit various products, markets or customer segments. For example, a company might use freemium pricing for software but bundle other services.
Optional product pricing
The base product is sold at a lower price, but customers are charged more for optional features or add-ons (e.g. airlines charging extra for checked luggage or in-flight meals).
Price lining (Product line pricing)
Different versions of a product are priced at distinct points along a spectrum (e.g. economy, standard and premium versions) to cater to various market segments.
Markets are not the only way that goods and services can be exchanged. There are a number of other approaches for handling the exchange of goods and services that don’t require a market. Contributionism could be adopted alongside any of these other exchange based approaches.
Sharing
Communal ownership - Goods and resources are shared among community members without direct compensation. Examples include communal housing, shared food resources and tool libraries.
Resource pools - Communities create shared pools of resources (e.g. equipment, land or food) that members can draw from as needed. These systems are often governed by mutual agreements or norms rather than markets.
Mutual aid
Cooperative production and sharing - People work together to produce goods and services that are shared among the group. Mutual aid emphasises voluntary cooperation, where individuals or collectives pool labour, skills and resources for mutual benefit, especially in times of need (e.g. community kitchens and volunteer-based medical care).
Time banking - In this system, people exchange services using time as a currency. One hour of work earns one time credit, which can then be used to receive one hour of work from another participant. This system eliminates the need for traditional currencies or market mechanisms.
Reciprocity
Delayed reciprocity - While gifts are given freely, there may be an unspoken expectation that the recipient will eventually reciprocate, but not necessarily with an equivalent good or service, and often at a different time.
Generalised reciprocity - Goods and services are exchanged freely, with the expectation that participants will continue to contribute to the community as needed. This is common in small, tightly-knit communities, where the social fabric itself ensures that contributions and needs are balanced over time.
Balanced reciprocity - In some societies, goods and services are exchanged with the understanding that something of roughly equal value will be returned in the future. Unlike barter, the exchange does not happen immediately, and there is flexibility in how and when the return happens.
Barter
Direct barter - Goods and services are exchanged directly between individuals or groups, without the use of money. The key limitation here is the "double coincidence of wants" meaning both parties must want what the other has to offer.
Barter networks - These systems formalise barter exchanges among larger groups, where individuals can trade with anyone in the network using an internal credit system (e.g. Local Exchange Trading Systems), reducing the reliance on one-to-one bartering.
Giving
Goods and services are provided freely without an explicit expectation of a return. The giving is based on social or cultural norms, often promoting social bonds or status within a community. Examples include traditional indigenous societies, religious practices or modern movements like open-source software.
Needs based distribution
Goods and services are distributed according to need instead of profit or exchange value. Everyone receives what they require for a good quality of life and resources are managed scientifically to ensure sustainability.
Direct consumption
People produce what they need for themselves and their families, with minimal or no exchange. Any surplus may be shared within the community rather than exchanged for profit.