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Perceived Value pricing method

Date: 05/11/2006 | Category: Business | Author: arvind

Marketing corporations of late, have started following new pricing methods to perfection. Although these so-called new methods had been evolved couple of decades back, their total integration into modern day marketing warfare is a recent phenomenon. These methods, in contrast to traditional methods, are riskier. 

One of the most popular new methods of pricing is ‘perceived value pricing’. Perceived value pricing works on a simple premise – how much the customer is ready to pay for the product? This method doesn’t consider the cost aspect like mark up pricing method. This method had been traditionally used in auction market places earlier. Now it has found many takers in FMCG and durable product markets too. 

Consider for example, a leading software maker. The cost of software is nothing compared to its retail price. However, because customers don’t have much of any other choice, they are compelled to pay higher price for a popular software tool. The value of the software perceived by the customers is higher than its cost. In traditional sense, a piece of painting won’t cost more than $500 including frame, paints, canvass, etc. However, the piece fetches millions of dollars in the market place. This is perceived value pricing. 

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