Crack the Secret Code to Profitable Pricing Strategies

Cost-Plus vs. Value-Based Pricing

Two common pricing strategies are cost-plus pricing and value-based pricing. Cost-plus pricing involves adding a markup to the cost of producing a product, ensuring a profit margin. This method is straightforward but may not always reflect the product's perceived value in the market. On the other hand, value-based pricing focuses on the customer's perceived value, allowing businesses to charge more if the product or service meets specific needs or desires. A study by Harvard Business Review found that companies using value-based pricing strategies often achieve higher profit margins².