The value of these additional features is considered from the customer's perspective, and the price is determined accordingly. This additional value can also come in the form of higher quality, better customer service, or other benefits that are not offered by competitors.įor example, a car manufacturer may charge more for a car that comes with additional features such as a sunroof or a high-end sound system. The price is determined based on the perceived value of the extra features or services provided to the customers. Value-added pricing is a pricing strategy that takes into account the additional value provided to customers through a service or product.
It can be achieved by offering a lower price than competitors, or by offering additional features or services that justify a higher price.įor example, a luxury car will be priced higher than a regular car, as the luxury car offers more features and a higher level of service. The price of the product is determined based on the perceived value of the product and the service provided to the customers. This is a pricing strategy that takes into consideration the quality and service provided to customers rather than the cost of production. Instead, it takes into account the other value adds - the ambience, quality of service, and the overall experience.Īs highlighted by the above examples, two types of value-based pricing strategies can be employed by businesses.
It is not only the perceived value of the food that determines the pricing. Similarly, an exquisite fine dining experience may be priced higher than a meal of the same quality at a regular restaurant. Pricing a product takes into consideration not only the cost of the raw materials used but also the perceived value of the product by customers.įor example, a painting may be valued more than the cost of the paint and canvas used to create it.
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