Value-based pricing

Value-based price, also called value-optimized pricing or charging what the market will bear, is a market-driven pricing strategy which sets the price of a good or service according to its perceived or estimated value.[1] The value that a consumer gives to a good or service, can then be defined as their willingness to pay for it (in monetary terms) or the amount of time and resources they would be willing to give up for it.[2] For example, a painting may be priced at a higher cost than the price of a canvas and paints. If set using the value-based approach, its price will reflect factors such as age, cultural significance, and, most importantly, how much benefit the buyer is deriving. Owning an original Dalí or Picasso painting elevates the self-esteem of the buyer and hence elevates the perceived benefits of ownership.[3]

  1. ^ Gary Armstrong; Stewart Adam; Sara Denize; Philip Kotler (2014). Principles of Marketing. Pearson plc. p. 265. ISBN 978-1-4860-0253-5.
  2. ^ Garrison Jr, Louis P.; Towse, Adrian (4 September 2017). "Value-Based Pricing and Reimbursement in Personalised Healthcare: Introduction to the Basic Health Economics". Journal of Personalized Medicine. 7 (3): 10. doi:10.3390/jpm7030010. PMC 5618156. PMID 28869571.
  3. ^ Helmond, Marc (2022-09-06). Performance Excellence in Marketing, Sales and Pricing: Leveraging Change, Lean and Innovation Management. Management for Professionals. Berlin, Germany: Springer International Publishing. pp. 75–81. doi:10.1007/978-3-031-10097-0. eISSN 2192-810X. ISBN 978-3-031-10097-0. ISSN 2192-8096.