Value-based pricing

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Value based pricing, or Value optimized pricing is a business strategy that sets selling prices on the perceived value to the customer, rather than on the actual cost of the product, the market price, competitors prices, or the historical price.^[1]

The goal of value-based pricing is to align price with value delivered. Price for any individual customer can be customized to reflect the specific value delivered. Examples could include metrics such as number of users, number of annual transactions, size of revenues, cost savings, or other measurements. Value based pricing typically enables companies to become more competitive and more profitable than using simpler pricing methods.

Value-based pricing is dependent upon an understanding of how customers measure value, through careful evaluation of customer operations or feedback to a survey. The survey methods used to determine the value, and therefore the willingness to pay, a customer attributes to a product or a service are Relative Attribute Positioning, Van Westendorp Price Sensitively Meter, Conjoint Analysis and Navetti Ratio To Complete