Browse Definitions :
Definition

value-based pricing

Value-based pricing is a method of arriving at an amount to charge for goods or services through assessing their perceived value to the purchaser. The value-based model contrasts with cost-based pricing strategies, such as cost-plus.

Generally businesses use value-based pricing as a means to a higher profit margin. In the consumer market, customers are often willing to pay more than a cost based pricing model, especially with emotional purchases. Customers may assess one company's product to be of greater value than a competitor's for many reasons including brand image, design, packaging, marketing, warranties, previous experiences and word of mouth. Apple, for example, has traditionally been able to achieve a higher profit margin because of the perceived cachet of its products and brand.

Companies that set good value-based pricing take into account how customers see their product in the context of competitor's offerings. Once an objective assessment and comparison of the strengths and weaknesses of the products are made, a realistic value to the customer can be estimated for each difference and the estimated values can be used to determine a reasonable value-based price for the product.

See also: wholesale price, list price, net price, fixed price, manufacturer's suggested retail price (MSRP)

This was last updated in May 2016

Continue Reading About value-based pricing

SearchCompliance

  • information governance

    Information governance is a holistic approach to managing corporate information by implementing processes, roles, controls and ...

  • enterprise document management (EDM)

    Enterprise document management (EDM) is a strategy for overseeing an organization's paper and electronic documents so they can be...

  • risk assessment

    Risk assessment is the identification of hazards that could negatively impact an organization's ability to conduct business.

SearchSecurity

  • cyber espionage

    Cyber espionage, also called cyber spying, is a form of cyber attack that is carried out against a competitive company or ...

  • virus (computer virus)

    A computer virus is malicious code that replicates by copying itself to another program, computer boot sector or document and ...

  • honeypot (computing)

    A honeypot is a network-attached system set up as a decoy to lure cyber attackers and detect, deflect and study hacking attempts ...

SearchHealthIT

SearchDisasterRecovery

  • risk mitigation

    Risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a business.

  • call tree

    A call tree is a layered hierarchical communication model that is used to notify specific individuals of an event and coordinate ...

  • Disaster Recovery as a Service (DRaaS)

    Disaster recovery as a service (DRaaS) is the replication and hosting of physical or virtual servers by a third party to provide ...

SearchStorage

  • cloud storage

    Cloud storage is a service model in which data is transmitted and stored on remote storage systems, where it is maintained, ...

  • cloud testing

    Cloud testing is the process of using the cloud computing resources of a third-party service provider to test software ...

  • storage virtualization

    Storage virtualization is the pooling of physical storage from multiple storage devices into what appears to be a single storage ...

Close