Customer perceived value

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Customer perceived value (CPV) is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering relative to perceived alternatives.

From the time marketing came into existence, companies have faced the toughest challenge to attract customers.Today, the same companies face the challenge to convince the customers to take their wallet share.This can only happen if the customer perceives that the value of the product being sold to him, is worth more than what he thinks of the product.

Let us take an example. Assume the cost of producing a product(cost to manufacture) is C1 and the price the manufactures sells at is P1.Assume the customer preceives that the value of this product is P2(P2>P1).Remember only if P2 is greater than P1 will the customer buy the product and the difference (P2-P1) will be termed as the customer perceived value.

It is also called as "Customer Surplus".

Here the difference (P1-C1) is the "Manufacture's Surplus".