![]() ![]() Value-based pricing is the tactic of basing prices on customers’ objectively measured value of your product or service. Therefore, the value can mean different things to different people, and it can be based on perception, an economic enhancement, or (what we most commonly associate with value) an exchange of some sort. Value is defined by the importance, worth, or usefulness of something. ![]() In order to explain value-based pricing, it’s first necessary to think about what we mean when we say value. To ease the difficulty associated with determining a pricing strategy, we decided to focus this article on a pricing method that our CPA and accounting firm has adopted a pricing strategy that more and more professional services companies have found meets their revenue goals while also increasing customer satisfaction. Additionally, competitive product pricing relies on countless internal and external factors. ![]() These two pricing processes are the cost-based approach, where a price is formulated from its overall cost of production (plus a markup), and the competitor based approach, where a price is created based on what other market participants are charging (or maybe a little less than they are charging if you’re a new competitor).īusiness owners, product managers, and marketing executives tasked with determining product or service prices have an increasing number of options where pricing methods and strategies are concerned. For nearly the entire history of capitalism, decision-makers have chosen one of two pricing strategies, often without knowing what pricing strategy they are actually using. Before anything can be sold in the marketplace, you need to formulate a price for that product or service. ![]()
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