Chart explains the approaches by two different flows, one below the other.
The top one is about "Cost-based pricing." The pricing is shown as 4-steps in sequence. Each step is connected to the next by an arrow. The 4-steps are:
Design a good product
Determine product costs
Set price based on cost
Convince buyers of product's value
The lower one is about "Value-based pricing." This is shown as 4-steps in sequence. Each step is connected to the next by an arrow. The 4-steps are:
Assess customer needs and value perceptions
Set target price to match customer-perceived value
Determine costs that can be incurred
Design product to deliver desired value at target price
A note tagged to the first step of "Value-based pricing" reads "Costs play an important ...
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