You will

often have to
calculate this
Pricing a product

• How much will revenue increase for the customer?

Monetary value • How much will costs decrease for the customer?
Maximum What is the customer’s
willingness to pay? + • Convenience
(the perceived value) • Exclusivity
Other value • Loyalty/credibility of brand
• Emotional
This is usually
estimated using
your judgement
e.g. +10%
• What do our competitors offer and at what price?
How are our competitors • What is their competitive advantage?
priced? • Are we differentiated?

Differentiated: when a product is distinguished from

What are our costs?
competitors to make it more attractive to a particular market.
Usually, the more differentiated a product, the less affect
competitor’s pricing has and the higher the customer is willing
to pay.
Competitive advantage: an advantage gained by offering
customers greater value, either by lowering prices or
providing greater benefit
• What is the unit cost?

Minimum

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