Value-Based Pricing

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Value-Based Pricing PROC 5830 - Pricing Webster University Introduction If you own and operate a store and customers are not coming in, what is the first thing you do? You hold a sale. Once you slash your prices by 25 percent or give shoppers who buy one item the chance to buy another item for 50 percent off, your merchandise will start flying off the shelves. While slapping a price tag on your product or service seems like a one-minute job, it is actually a lot harder than it looks. Set your prices too high, and you lose sales. Set them too low, and you lose money. Value-Based Pricing Value-based pricing is a method of pricing products in which companies first try to determine how much the products are…show more content…
I shop for necessity, I am under the impression that certain items will always be certain prices. For instance, I have always assumed a bigger laptop (17 inch) would cost more than a smaller laptop. I realized once I bought my laptop at a great price…size does not matter, at least for the size of the laptop that I was drawn to. Avoiding the cost-based pricing strategy, the company I bought the laptop from were able to price the products according to what customers needed. I may have missed out on this diamond in the rough, had it been priced according to size and not customer needs. I am also a sales shopper, I only buy an item when it is on sale. I buy a lot of items during a sale and often am more intrigued to buy due to a sale. Business’ price the “sale” items according to customer trends and spending. For example, there is more spending during Black Friday, in preparation for the Christmas holidays. If a business were to use cost-based pricing during these peak times of consumer spending, it could result in less profit. The price for certain items would depend more on how much it costs to manufacture and not how much I am willing to pay. I am one of the customers that have no clue how much it cost to make my laptop, Galaxy tablet, or television; I am just concerned with whether I can afford it and will the price be reasonable. Value-based pricing is very effective for an average shopper such as myself. Conclusion Value pricing
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