If there is perceived value, a customer will buy. And pricing is a question a question of perceived value, where it should be based on value created. This is about getting your customer strategy right.

This can be defined in many different ways. This is best highlighted in the pricing / value pyramid, which is reflected in how well you have created you brand positioning through your brand strategy.

Pricing is about balancing value created and value perceived

You can create value till the cows come home but if you are building a bigger mouse trap that over specs, you have wasted your time. This is about your customer strategy and managing value and managing your bottom line. So many businesses’ have the potential to go out of business or have to high a cost because they have:

• Started off trying to be different and over generating value that is not relevant. In other words, a nice to have, but not a critical defining customer-driven value factor.
• Or historically created value that was relevant at the time but is no longer relevant and is no effectively over producing value at a cost with no return.

This point is a critical principle in the strategic book: “Blue Ocean Strategies”.

The value / price pyramid

As a principle to guide your pricing strategy you need to look at the value / price pyramid and determine where you want to sit.

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