![]() ![]() If it’s more cost-efficient to replace an item entirely this will have a significant impact on pricing. If this applies to your product, you’ll need to think about the decisions customers will be making when it comes time to repair or replace an item. The repair threshold might hold some sway in the perceived value of a product. If the product you’re selling involves several different parts, this gets a little more complicated. Prices should be set by considering the value of a product or service, in comparison to those being offered by competitor companies. Consider Product Attributes (& Differentiated Worth) Take multiple segments into account, considering a range of value-based prices for each segment you intend to sell to. These strategies can only be successful if they are unique to specific target segments. Value-based pricing is determined by customers, but the factors that influence a customer’s perceived value of a product will vary dramatically from person to person. Is it time to rethink your pricing strategies? Follow our step by step guide to learn how to incorporate value-based pricing in your business. Read the Case Study How to Apply a Value-Based Pricing Strategy While any chosen strategy should of course align with the overarching aims of the brand and business, value-based pricing is based on the differentiated features that will add value for consumers. Of course, the value of a brand will always play a part in decision-making, but it shouldn’t be a determining factor if value-based pricing is being used. Value-based pricing isn’t based on brand value. For example, a competitor with rock bottom prices may well derail success, even if the perceived value of its products is lower. There are always other factors to consider, many of which hold huge amounts of power in determining the success of a chosen strategy. Like all pricing strategies, value-based pricing can never guarantee a win – no matter how much data is evaluated in the process. All too often, the strategy is talked about as if it is a panacea, capable of solving all manner of pricing woes in one fell swoop. There are two common misconceptions that surround value-based pricing. Prices are decided based on the perceived value of a product to a customer, and it’s this value that ultimately sets the price. With value-based pricing, it’s all about the customer. The difference here is the determining factor in how prices are set. Value-based pricing is a type of pricing strategy, just like cost-plus pricing, competitor-based pricing or demand-based pricing. We’ll debunk common myths that continue to plague conversations surrounding it, and show you what you need to do to apply value-based pricing within your business. Here we’ll reveal all you need to know about value-based pricing. This may be due to the fact that the strategy itself remains largely misunderstood. Value-based pricing is one of the most-talked about, yet most underutilized, pricing approaches. Value Based Pricing What is Value-Based Pricing? ![]()
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