Value-based pricing

Value-based pricing is the method of deriving price from the value the offer creates for the customer, rather than from own costs or competitors' price levels. The core is quantifying the ceiling: what does the product deliver in revenue, savings or experience, and what share of that can the price capture? The method forces customer research and segmentation, because value differs per use situation. The pitfall is false precision: value is partly perception, and without a strong brand position and good price communication the calculated ceiling remains theory.

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