What is prices based on values?

Prices based on values ​​is a prices structure based on the ideas of the value that the consumer has instead of any other factors. Thanks to this strategy, business is trying to appreciate their products according to what the customer believes is the right value. Other strategies are based on the cost of goods or specific profit margins, but this strategy does not use any of these metrics. The advantage of this approach is increased profitability, simplicity and ability to better understand customers. Instead of setting up prices for a specific profit range at the top of the product cost, the company attempts to determine how much an individual would pay for the product. This creates a situation where companies have to be very consistent with their customers.

To find out how many customers are willing to pay for the product, the company must carry out a decent amount of research. Many times this research will come in the form of surveys or customer panels. The company will try to find out what customers think that naturalThe value of the product is with this research.

companies that do not use this type of price could potentially leave a profit on the table. Customers usually have an idea in their heads about how much the product should cost. When the company appreciates this level at this level, it will be able to optimize sales and profitable margins. In some cases, companies that do not use values ​​-based prices decide on a price that differs from the perceived value. If this happens, it can reduce the volume of sales or do not catch as much profit as possible at the right price.

One of the advantages of this price strategy is that it is easy to implement. The most difficult thing is to survey the customer. Once it is completed, the company can simply cost its products. It may not use complicated formulas to achieve the price of each product. This makes it easier in society and saves time overall.

Another advantage of useThe price based on values ​​is that the company will be able to better understand its customers. The company must put a lot of resources in exploring its customers, which often leads to profitable ideas. Prices based on values ​​can more synchronize companies with their customers and lead to further sale in the future.