What’s the relationship between price and value? Pricing a product or service is often a fraught endeavor, especially for entrepreneurs and innovators in burgeoning industries in which price history or competing products may not provide a solid reference point. Determining the price of a new product requires determining its perceived value to consumers. However, this is rarely a clear-cut decision due to the many factors that influence consumer decision-making.
Pricing strategy, a discipline shared by entrepreneurs, marketers, psychologists, and economists alike, offers several guideposts that help determine value for a new (or improved) product. Going beyond the determination of value, pricing strategy also considers the psychological impact of price on consumer’s perception of that value.