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ARE YOU PRICING YOUR

PRODUCTS CORRECTLY?
Often, pricing strategies waste potential because
they price products purely based on value. This
article explains why this strategy falls too short and
how behavioral pricing can open up additional
potential for your pricing strategy.
The gold standard of value-
based pricing is to set prices
based on the value created
by the items for the customer
and the resulting price
acceptance . However, this
approach results in two
difficulties :
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You can determine price acceptance

empirically for only a few products. This is
hardly possible for assortments with
hundreds or even thousands of products.
An analysis of previous transactions can
help but will only ever find those pricing
margins that have been exploited in the
past and is therefore blind to possible
future potential.
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The assumption that the value of a

product is an absolute property inherent
characteristic of the product does not
stand up to the reality test. The same
piece of clothing appears more valuable
at a designer boutique than at a discount
store. The same is true for price: If you
show your customer a product, he is not
likely to be able to tell you what he would
be willing to pay for it.
THIS IS WHY YOU CANNOT AND

SHOULD NOT PRICE ALL

PRODUCTS BASED ON VALUE OR

PRICE EXPECTATIONS

This is how you can distinguish the

following types of products:
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Bestsellers should actually be priced based

on value and serve as a reference for other
products

EXAMPLE

The regular full-fat milk at the

supermarket, the power socket at the
electronic wholesaler
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FUNCTION

Highlight items that convey the supplier’s

brand positioning that should be priced
according to the supplier’s price image

EXAMPLE

the organic vegetable sold at the organic

supermarket, the quality tool sold by the
electrical wholesaler
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FUNCTION

Products that customers would not have

bought spontaneously without the
promotion can also be priced below value

EXAMPLE

The bulk carton of coffee at the

supermarket, the gas grill at the electrical
wholesaler
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FUNCTION

Slow-moving products at the top of a

category that are deliberately priced above
so that the skim products appear cheaper

EXAMPLE

The Demeter free-range milk at the

supermarket, the high-end fibre optic
cable at the electrical wholesaler
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FUNCTION

Items purchased infrequently and out of

urgent need. Customers have little idea of
the price of these products

EXAMPLE

The exotic spice in the supermarket, the

rarely used fibre optic cable in the
electrical wholesaler
IF IT IS ABOUT REGULARLY USED

SERVICES (E.G., IN THE FORM OF

SUBSCRIPTION), THEN THERE ARE

FURTHER ADDITIONAL FUNCTIONS:

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FUNCTION

They are mainly free products that include

only the basics of the offer.
Like promotional products, acquisition
products get customers to take the first
step into subscribing

EXAMPLE

A trial subscription to a newspaper

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FUNCTION

From the purchase on the customer

relationship must be nurtured. Hence, you
must ensure that the customer tries out
the product and uses it regularly

EXAMPLE

Making the daily newspaper available on

all end devices or making articles available
as podcasts
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FUNCTION

Trial products allow users to test the

enhanced product beyond the standard
features for a limited time

EXAMPLE

A one-day pass for a trial

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FUNCTION

Customers who use the everyday product

consistently and are excited about trial
products can then be offered more
products to draw them into higher-priced
offers or options
DO YOU KNOW THE FUNCTION OF

YOUR ITEMS FOR THEIR

CUSTOMERS ...

... and are your items priced accordingly?

Let's find out!

For an individual consultation,

please contact us directly.

beratung@vocatus.de

Or directly on LinkedIn!