Value-added pricing

Definition (1):

Attaching value-added features and services to differentiate a company’s offers and charging higher prices refers to Value-added pricing. For example, when rebranding their hotels, Southern Sun realized they could give their customers a positive experience not by lowering prices but by adding value to the services they provide.

Definition (2):

“Value-added pricing differentiates your products by adding features or services that your competitors don't have and that customers will pay more for.”

Definition (3):

Value-added pricing strategy looks away from all specific points of pricing e.g. production cost and concentrates on the customers’ viewpoint about the product/service, and their willingness to pay for that. This strategy can increase your profits quickly but in the right way.

You can create a value-added pricing strategy by taking the following steps:

  1. Talking to the customers about the product/service.
  2. Determining market value.
  3. Considering the highest point of price.
  4. Give the customers value for their paid money.

There are many real-life examples of this pricing strategy such as adding features or services that are free or low-cost; donating a part of sales to a local charity highly regarded by the customer base; consistent excellent service, not merely a slogan for advertising; offering reward clubs to frequent buyers; money-back and quality guarantees; eco-friendly features highly valued by the customer base, and the like.

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