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Customer-Driven Pricing

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❶Cost-plus versus value-based pricing".

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What is 'Customer-Driven Pricing'
BREAKING DOWN 'Customer-Driven Pricing'
Setting Prices Based on Customer Value

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Customer-driven pricing is the practice of setting prices according to perceived value on the part of the customer for the goods or services. The assumption basis for this model is that a customer is willing to pay a certain price when the value delivered exceeds that cost.

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Customer value-based pricing is setting price based on buyers’ perceptions of value. Therefore, the marketer cannot design a product and marketing programme and afterwards set the price. Instead, price is an integral part of the marketing mix – it is determined before the marketing programme is set. The Process of Customer Value-based Pricing. In customer value-based pricing, the company first .

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In this module we will start with the importance of pricing, especially for the bottom line. Having this in mind, and after showing how pricing is the most important driver of profitability, when you finish this module you will be able to execute cost, competition and customer-based pricing. Value-based pricing in its literal sense implies basing pricing on the product benefits perceived by the customer instead of on the exact cost of developing the product. For example, a painting may be priced as much more than the price of canvas and paints: the price in fact depends a lot on who the painter is.

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Misconception 3: The brand’s value is part of the value-based pricing calculation. With value-based pricing, the marketer’s goal is to put a dollar amount on its differentiated features. The method’s focus is on features that add value to the customer and that can be converted into dollars and cents. Customer-based pricing: where prices are determined by what a firm believes customers will be prepared to payCompetitor-based pricing: where competitor prices are the main influence on the price setLet's take a brief look at each of these approaches;.