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The fundamentals of pricing

Great pricing is about managing the value
proposition effectively.

Consumers attribute a value to your brand
(consumer perceived value) based on how they
think its benefits relate to its price.

Their willingness to buy a brand depends on whether they think it represents better value than
the competitor options.

Consumer perceived value = perceived benefits divided by price

The customer value equation works the same way except that customers look for different benefits.

Considering the views of the consumer and the customer and taking into account the activity in the competitive environment is key to successful pricing.