Cost And Value Based Pricing Research Assignment

Cost and value based pricing
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Cost and value based pricing
Pricing decision is the most critical decision a business can make whether introducing a new product or service to the market or repositioning the existing ones thus; it's the only marketing strategy that can either increase sales or reduce demand. Methods deployed by businesses to determine the pricing of their products and services includes; cost-based pricing that entails firms setting the prices based on a percentages which are slightly above the total cost incurred during the production process (Christopher & Gattorna, 2005). The second method is value-based pricing in which the organizations decide on the price based on the potential value that the product is likely to will bring to the consumers. In this paper, we will establish the effective way of pricing in the business.
In choosing a value-based pricing, the firm focusses on the amount that the customers are freely willing to pay for the product which is high in the long run (Anderson & Wynstra, 2010). In contrast, the cost-based pricing, the business prices between the price floor and price ceiling and the market conditions dictates where between the floor ...