Pricing Strategy Framework 1: Value Creation and Capture
Posted: Mon Dec 23, 2024 4:31 am
However, in today's world of direct relationships with consumers and brand, value based pricing is the best pricing strategy for eCommerce.
To successfully implement a value pricing strategy, we need to establish a few frameworks.
Optimize your pricing strategy: Barilliance allows you to iden cell phone lists tify price sensitive customers and enables you to bring customers back for repeat purchase. Request a demo here.
Image Credit
Value creation and capture is the first pricing strategy framework to understand.
According to this theory:
A customer will only buy if the value they receive is greater than the price. This is called consumer surplus.
A business will only produce goods and services if it can sell for more than it costs to produce the item. This is called profit.
Adding both the consumer surplus and profit together yields the total amount of value created by the company (in this case, your eCommerce store).
This framework is important because it a) reenforces the idea that customers buy value and b) gives companies a choice in how much value they capture.
The image above does an excellent job laying out these different components.
Pricing Strategy Framework 2: Value is Subjective
Image Credit
To successfully implement a value pricing strategy, we need to establish a few frameworks.
Optimize your pricing strategy: Barilliance allows you to iden cell phone lists tify price sensitive customers and enables you to bring customers back for repeat purchase. Request a demo here.
Image Credit
Value creation and capture is the first pricing strategy framework to understand.
According to this theory:
A customer will only buy if the value they receive is greater than the price. This is called consumer surplus.
A business will only produce goods and services if it can sell for more than it costs to produce the item. This is called profit.
Adding both the consumer surplus and profit together yields the total amount of value created by the company (in this case, your eCommerce store).
This framework is important because it a) reenforces the idea that customers buy value and b) gives companies a choice in how much value they capture.
The image above does an excellent job laying out these different components.
Pricing Strategy Framework 2: Value is Subjective
Image Credit