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