Value-based pricing is a perfect example of the value-driven approach to pricing. It’s based on one simple premise: value what your customers value and be honest about it! If you have products, events, or services that are price sensitive, then this pricing strategy can help boost customer sentiment and loyalty. It can also help prioritise your customers in other facets of your business like marketing and services.
With value-based pricing, companies price products or services depending on what the customer is willing to pay. Even if they can charge more for a product, they decide to set their prices based on customer interest and data. If you engage in value-based pricing you must have a product that differentiates itself from the competition. It needs to be customer-centric, meaning any improvements or added features should be based on the customer’s wants and needs.
Value-based pricing strategy is great for most businesses because of its ability to help with three things: building trust between company and customers, increasing revenue while maintaining profitability, and getting feedback about which product should next undergo a development cycle.
Value-based pricing strategy for events
When using a value-based pricing strategy for events it’s more than just providing good value, it’s about creating an experience. At the event level, value-based pricing can be set as low ticket prices for events with limited available slots. This could create urgency and encourage people to purchase tickets ahead of time or risk missing out on their ideal date/time slot for when they want to attend the event. It also allows you to offer discounted early bird prices in order to fill up spaces at your venue before they become unavailable (this is especially important if this type of business event only happens once every year).
Value-based pricing for services
Value-based pricing for services is a little different. The value of your service is based on how much value it brings to the customer’s life, and only they can decide what that value may be! It could be as simple as writing a blog or as complex as implementing a marketing strategy
Services are not always tangible, but you should still price them according to these guidelines: charge people less if they want help from you in carrying out basic tasks (e.g., moving house), charge higher rates for services requiring specific training and expertise, like child daycare providers who must undergo rigorous background checks.
Value-based pricing for products
When looking at products, value can come from the research and development process, how many features there are or what it does for the customer’s life (e.g., a coffee maker that makes two cups of coffee at a time). Even if you have products or services that cost significantly more than your competitors’, you still need to value-based price them in order to increase sales without sacrificing profit margins!
Although pricing value is an inexact science, you can determine the price with marketing techniques. For example, you can set the pricing value by examining the value perceived and value received. Value perceived means value that customers believe to be true and value received means value they actually experience. This is important because value-based pricing is about more than just what you charge for a product. You also need to consider value added services, return policies, warranties and other perks that will help build customer sentiment and loyalty.
Value-based pricing works best with value driven companies who are willing to charge less than what they’re worth but have done their research on how much it would cost them (in time) if someone else were doing an equivalent task so they know what differentiates their company from others.
Value-based pricing has many benefits and you can use it in any price sensitive industry. It helps your business focus on its value proposition and think about how to offer a better value than the competition. If you do it correctly, this pricing strategy will boost customer sentiment and loyalty which in turn boosts brand equity – an important asset for any company! Ultimately, value-based pricing is just one more way of making sure that customers are happy with what they purchase from you so they’ll keep coming back.
If you’re wondering whether value-based pricing is for you, contact us today!