Table of Contents

• Customer perceived value

I've written competitive pricing method. Now, I want to discuss about customer oriented pricing method.

Zeithami (1988) noted that consumer based pricing is product's value that is perceived by consumer. You can say this value is perceived value. 

The most important to concern in perceived value pricing is providing more benefits and functionalities to the customer.

If a company can deliver very good benefits (especially intangible benefits), it means the company can deliver very good values along with it's product.

Afterwards, if you have very good values or consumer feel that you have delivered good values, you can determine a premium pricing.

Customer perceived value

• This value represents a trade-off for consumer between 'give' and 'get' component.  . 
• Customer perceived value is the difference between total customer value and total customer cost .

Customer value in this term is customer expectation. Customer expectation is formed from past buying experiences or friend's recommendation or company's promise.

Customer cost in this term is cost that prompts the willingness to pay for a product.

Customer satisfaction is event when customer meet his expectation. It happens after customer buy ('give') and after customer utilize the product ('get').

Customer satisfaction will result customer loyalty.

The more customer loyalty you obtain the more your company performance you get. See value delivery cycle to show the relationship between customer perceived value and the performance of company in the picture below.

The samples of good customer perceived values

• Easy for getting information
• Convenience 
• Good delivery
• Good warranty
• Saving cost
• Instant transaction
• Very good service
• Exclusive product
• Good after sales service
• Outstanding quality product
• Saving time
• Etc

I tell you once more, above are customer expectation. When customer meet his expectation after buying the product, it will result customer satisfaction.

So, if you want to obtain good customer satisfaction, and customers are willing to pay the cost to buy your product, the ultimate requirement is building an outstanding image and give more intangible benefits.

Customer based pricing

Customer based pricing means customer-driven pricing. The essence of this customer oriented pricing is knowing what is customer telling about you. Do they meet their expectation after using your product? What are your values that are perceived by them? What are your promises and what are they satisfied with your promises?

Values which are perceived by customer is different. Each customer has different perception.

Anderson, Jain, and Chintagunta (1993) has formulated the way to count customer perceived values by counting the average of customer perceived value at special market segment, they are:

• Internal measurement inside a company.
• External measurement: measure perceived value in the market by directly interviewing the customer.
• Indirect questions to customer in order to estimate product/company value.
• Calculate the gap between internal and external measurement.

Overall value estimation

• Value measurement by asking the customer willingness to pay the value (product, benefits, and it's functionality).
• Direct question about image or value about your product, service, benefits, functionality, etc. 
• Getting an indication from customer for willingness to pay against more benefits/values and less benefits/values.
• Benchmark with competitor by asking customer your product/benefits/values against your competitor.

Once you got the data above, you will be able to determine a proper price related to your value which is delivered to customer.