Revenue
Value-Based Pricing
Definition of
Value-based pricing is a pricing strategy that sets the price of a product or service based on the perceived value it provides to the customer. It is a departure from traditional pricing methods that are based on production costs and competitor prices. In value-based pricing, the focus is on the customer's perception of the product's worth and the benefits it delivers. The goal is to capture a fair share of the value created for the customer while maximizing profits. For instance, a luxury car manufacturer might price its vehicles based on the features, prestige, and exclusivity they offer, rather than the cost of production. By doing so, they can target consumers who are willing to pay a premium for those benefits. Similarly, a software company might offer different pricing tiers based on the user's needs and the value they receive from the product.
