Question

what is value based pricing and what type of service does it offer? in 200 words

Answer 1

Value-based pricing is the pricing strategy in which the price of the product is set based on what the customers perceive the value of the product is instead of determining the price based on the cost of the product. Businesses that offer unique, innovative or highly valuable features or services have the advantage to consider the value pricing model than the businesses that sell commoditized items. Example: Top players of the fashion, cosmetics or personal care industry come up with the price based on the brand image. The perceived value of the associated brand gets a positive impact if a designer can persuade a famous celebrity to use the product at any important event. Companies need to enhance the customer's self-image or facilitate unparalleled life experiences about the product or service so that the perceived value reflects the worth of it making the customer willing to pay the price set by the company. The product or service must be customer-focused so that any modifications or added features should be based on what the customers want. It is also to assess and measure the value of the product before setting the price because setting the price too high may push the customer to try other similar brands and results in the loss of customers.