Pricing strategies Business & Marketing Essay Paper

Three Major Pricing Strategies
(Customer-Value, Cost Based, and Competition Based)
[name]
[school/course]
[professor]
[date]Companies utilize pricing strategies that matches their industry and the goal they desire to meet. Below are three major pricing strategies (customer-value pricing, cost based pricing, and competition based pricing) that are used to determine price range in the market.
I - Customer Value Pricing Strategy
As suggested by the name, customer-value pricing is a strategy that bases the product price on how much the market assumes the value of a product. It means that the value of a product lies in the value perception of the customers. This strategy is mostly applied to products that give intangible value to the customers when bought. With that being said, such a company puts focus on addressing the customers' major concern on product consumption. Their product development primarily consults the customer's preferences. For instance, well-established brands cost higher because it gives a reputation to those who buy their products (Hinterhuber, 2008).
Apple is one of the companies that utilize a customer-value pricing strategy in their products. In addition to their already established brand, people have been conditioned to the high-value price of Apple products. The loyalty of people to Apple products even justifies the price that Apple set for their products. In addition to this strategy, Apple also uses price skimming in raising its prices to raise its value (Sliwinska, Ranasinghe & Kardava, 2008). However, while they create products that suit the customers' preferences, they also put into consideration the future marketing strategies they have for other products. That is, making products that will mostly be compatible with other Apple products only.
Apple's strategy of using the customer-value pricing contributes to the establishment of Apple as a high-end technology company. People presumed the value of their products that's why leveling the real price to the people's standard is a suitable strategy for them.II - Cost Based Pricing Strategy
Cost pricing strategy considers the overall cost of production of a product when settling the price. Parts of the overall cost are labor, production, materials, rents, expenses, and many more. These production costs are computed to identify the right price for each product. This method is usually utilized by retailing companies. Beca...