Which pricing approach is based on perceived customer value rather than cost?

• A. Cost-plus Pricing
• B. Value-based Pricing
• C. Penetration Pricing
• D. Dynamic Pricing

Answer: (B)

Pricing based on perceived customer value hinges on the benefits customers receive and how much they’re willing to pay for them. You estimate the monetary value of the product’s advantages—like time savings, quality, convenience, or prestige—and set a price that reflects that value, often comparing against alternatives and competitors. This differs from cost-plus pricing, which starts with production costs and adds a markup, without tying price to how much customers value the offering. Penetration pricing uses a deliberately low price to gain market share, not primarily tied to value delivered. Dynamic pricing adjusts prices in response to demand, supply, or timing, rather than the value customers ascribe to the product. So, pricing that centers on perceived value is value-based pricing.