This PPT slide, part of the 56-slide Strategic Pricing Framework and Tactics PowerPoint presentation, contrasts 2 distinct pricing methodologies: cost-based item pricing and value-based customer pricing. It highlights a fundamental difference in approach. Cost-based pricing is depicted as reactive, focusing on maintaining margins by primarily considering the cost of the item or service. The flow illustrates that the process begins with the item or service, moves to determine the cost, and then sets the price based on that cost. The key question posed here is about maintaining margins, which can limit flexibility and responsiveness to market dynamics.

On the other hand, value-based pricing is proactive. It emphasizes understanding customer segments and their sensitivity to value. This approach starts with identifying the customer segment, assessing their perceived value, and then determining the price accordingly. The flow suggests that the price is informed by the value perceived by the customer rather than just the cost incurred by the business. This method allows for greater profit maximization as it aligns pricing with customer expectations and willingness to pay.

The slide underscores the importance of adopting a value-based approach to pricing, which can lead to more strategic decision-making. For potential customers, this insight is crucial. It signals that a shift towards understanding customer value can enhance profitability and market positioning. The visual representation effectively communicates the differences in methodologies, making it clear that a value-based strategy is not just beneficial, but essential in today’s competitive environment.

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