![]() ![]() ![]() Other people might care more about how the hybrid is good for the environment. People who are looking for a new car might think about how much money they will save on gas by switching to a hybrid. It can be hard to figure out which is more important to people when they are deciding whether or not to buy something. Some consumer products, like hybrid cars, have both monetary value and environmental value. This is because they focus on creating satisfaction and pleasure for people. The prestige and beauty of the watch gives them the psychological benefit that they value.Īs the Rolex example shows, many consumer products have more psychological than the monetary value. Many people buy Rolex watches not because they make a lot of money, but because they want to feel good about themselves. Psychological value is created when a customer feels satisfied with a product for reasons that go beyond its function or practical use. If the software can help the company generate $5,000 in additional revenue and save another $10,000 in hiring costs, $15,000 of value is being created through the software. When a company decides to buy AI-powered software, the company is thinking about the costs that can be saved e.g hiring fewer people to do the same task, or how it can generate more revenue e.g send personalized emails to customers that have a high response rate. Monetary value is the most important element for most business-to-business purchases. ![]() Monetary value represents the total cost savings or income enhancements that a customer accrues as a result of purchasing a product. However, they require different approaches to estimating them. Both are important in figuring out how much someone is willing to pay for something. There are two types of economic value: Monetary and psychological. If the beach vendor wants to attract that segment, they should find a way to offer something that this group values highly. Other people who are more active may not think it is worth as much. They are willing to pay a lot to not have to do anything themselves. Some people think that the value of convenience is very important. The value of this convenience depends on how much people care about not having to drive. This is because it is more convenient for people to not have to drive to a store. The vendor is selling a product at the beach that is worth more than the other products available. But often, people are willing to pay more for a product if they are getting something special, like a cool cola drink at the beach. Some people always want to buy the cheapest product. This value is determined by what the customer’s alternatives are.įew people will pay $5 for a cola, even when they value it at $10, if they think there are other cheaper options available. This is called exchange value, and we call it economic value. The key thing to think about when you’re creating a pricing strategy is not what something is worth to you, but what other people are willing to pay for it. What do marketers mean when they talk about pricing to reflect value? Economists call this use-value or the amount of pleasure someone gets from using a product. ![]() The term “value” can be used to mean how much someone saves or is satisfied with a product. 12 Tips for implementing a successful value-based pricing strategy ![]()
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