pricing strategies by overemphasizing cost-related criteria at the expense of focusing on the value of the product to the customer. Cost-based pricing strategies are focused on short-term value to the vendor. Conversely, value-based pricing is based on the customer’s perception of the value of the product, not on product costs. Furthermore, value-based pricing strategies are focused on creating long-term value for the customer. Besides that, from a marketing perspective, the goal of pricing strategy is to assign a price that is the monetary equivalent of the value the customer perceives in the product while meeting profit and return on investment goals. Conversely, pricing approaches based on customers’ perceptions of value are strategic and long-term in nature since they are focused on capturing unique value from each market segment through the pricing mechanism.
Firms that invest in a strategic pricing centre can make better product decisions throughout the development process by understanding how customers value product alternatives and arrive at prices that they are willing to pay. Nevertheless, competitive pricing objectives are set to exploit a competitor’s vulnerability. A sufficiently low price may keep competitors out of a key segment.
Product-line pricing objectives enable the exploitation of shared economies across the product line and across segments.
