While the basic item is economically priced in the Add-on business model, additional add-ons push up the ultimate price. In the end, clients spend more than anticipated, but benefit from the ability to choose solutions that are tailored to their unique needs. Airlines tickets are a well-known example: passengers pay a modest base fare, but the total cost is boosted by 'add-on' costs such as credit card fees, food, and baggage fees. Generally, the Add-on pattern necessitates a highly sophisticated pricing strategy. The primary product must be effectively promoted and frequently supplied at rock-bottom prices. Online marketplaces enable this type of pricing since they enable customers to compare rates. FareCompare.com and Skyscanner.net compare airline tickets, while other firms compare hotel rates, vehicle rentals, and holiday packages. Such direct price competition fosters a winner-takes-all mentality. As indicated, buyers pay a small premium for additional features, which may include additional qualities, ancillary services, product extensions, or even specific product customization. Customers must decide whether to pay additional money on add-ons or stick with the initial fundamental value proposition. This is where they can benefit from the Add-on pattern, as they have the option of customizing their product to their specific preferences or omitting unneeded additions. On the other hand, buyers may end up paying more for the finished product than they would have for comparable rival items because of the optional features they selected. When developing a value proposition, firms must generally decide which product features would result in the highest marginal utility for the largest possible number of customers. Beginning with the essential functionalities of the basic product, each customer can then select his or her favorite add-ons to ensure the product provides the maximum amount of usability.

When and how to apply Add-on:

This pattern will work effectively for your firm if your clients can initially choose a basic product, such as a flight from London to Paris or an Audi A4, and then add features that are less price sensitive. Consumer behavior study conducted recently reveals that this is frequently the case for consumer products. Customers initially make reasonable purchasing decisions based on factors such as price, but eventually succumb to emotionally motivated purchasing behaviors. Once squished into that cramped economy seat, you don't care how much the beer and food will cost. 
When numerous decision makers are involved in the B2B context, the Add-on structure may also perform well: Investors frequently attempt to minimize their initial investment in order to maximize their profit when they eventually sell their property; the cheapest air conditioning systems, elevators, and security system will suffice. This leaves facility management responsible for future service cost increases. A well-known example of a company that uses this pattern is Ryanair.