Value-Based Pricing

Setting prices based on the value customers get, the revenue you generate or costs you save them, rather than your own costs or competitors' prices.

Why it matters

Value-based pricing captures the most of what you are worth and can justify premium prices, but it requires truly understanding your customer's economics. It is the opposite of the common trap of pricing off your own costs.

For example

A tool that saves a firm 1 crore a year prices at 20 lakh, based on the value delivered rather than what it costs to run.

Worth your time

What is Value-Based Pricing and How is it Applied in SaaS? Paddle · guide A concrete, hands-on guide to setting price by the value a buyer gets rather than your costs, with the steps to actually do it.

Related terms

Pricing Strategy Value-Based Selling Penetration Pricing

Go deeper

See how founders actually handle this on Growing and marketing, part of the Starting Up hub.

eChai Partner Brands