Smarter Pricing: How to capture more value in your market

2. When they say price, they really mean value

Smarter pricing begins by understanding that the customer is trading money for more than simply a product or service. Customers are buying a combination of product (or service) performance, plus an emotional association. For instance, DHL’s express airfreight service competes with low-cost no-name shippers, but combined with the DHL service there is an emotional factor – its reputation for on-time delivery. In the wholesale meat market during the Asian bird flu epidemic in Spring 2004, chicken with a proven European source commanded a price premium based on health security – the product came with an emotional association of reassurance.

Often customers claim that the most important criterion is ...