Article Summary of Customer Value-Based Pricing Strategies: Why Companies Resist

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ARTICLE SUMMARY OF CUSTOMER VALUE-BASED PRICING STRATEGIES: WHY COMPANIES RESIST
Basically this paper discussed the challenges that company faced in implementing the value based pricing strategy and recommendation how to win over other approaches namely cost-based pricing, and competition-based pricing. Costumer value-based pricing is defined as the factor in determining the product price is depend on the product value and service quality deliver to customers. In other word, the price of the product or service is depending on its performance. The more value customers perceive on the product, the more expensive the product will be. Meanwhile, cost-based pricing approach is the price of the product is gathered after the cost of the product is considered. On the other hand, competition-based approach is the price of the product is determined based on the price of competitors’ product. Normally, it follows the average markets price. In addition, each approach has its own strength. For instances, data for both cost-based and competition-based pricing are easy to access since it already available. While, customer value-based pricing is takes into consideration of customer perception in pricing its product or service. Thus, the segmented customers could afford to buy the product or service. Nevertheless, researcher found that the main strength of customer value-based pricing has competitive advantages over other two approaches especially in pricing of new product. But in reality, industries prefer to use competition-based and cost-based. Therefore, the author found out why firms resist using value-based approach in pricing its products and services. First is due to difficulties in making value assessments. Indeed, the firm is vague about its products or services valued by customer. Thus, it is difficult for them in pricing the goods. However, there are several methods in…...

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