Consumer Perceptions of Price and Value

In the end, the consumer will decide whether a product's price is right. Pricing decisions, like as other marketing mix decisions, has to be buyer oriented. While consumers purchase a product, they exchange something of value (the price) to get something of value (the benefits of having or using the product). Effective, buyer-oriented costing involves understanding how much value customers place on the benefits they get from the product and setting a cost that fits this worth.

A company frequently finds it difficult to calculate the values customers will attach to its product. For illustration, calculating the price of ingredients in a meal at a fancy restaurant is relatively easy. But assigning a value to other satisfactions such as flavour, environment, relaxation, discussion, and status is very difficult. These values will vary both for different consumers and different situations. Still, customers will use these values to estimate a product's price. If consumers perceive that the price is greater than the product's quality, they shall not buy the product. If customers perceive that the price is below the product's quality, they shall buy it, except the seller loses earnings opportunities.