value pricing

Value pricing, also known as value-based pricing, is a pricing strategy in which pricing is primarily based on perceived customer benefit and not on costs incurred or a profit mark-up.

The focus of pricing is the perceived value or the customer’s willingness to pay. Value-pricing is particularly successful for products that are largely sold via positive emotions (e.g. festivals, drinks in a bar) or strong brands (e.g. Apple products, branded clothing). The challenge of value pricing is to determine the actual willingness to pay. In practice, tools such as expert assessments, the observation of purchasing behavior in experiments or conjoint analyses are used for this purpose.