A Study of Perceived Quality and Price: Customer Value-Based Pricing Strategy

摘要

The purpose of the paper is to develop a more practical pricing strategy, which links price with the profit of a product with certain quality, and to propose the calculation approach of the optimal price. First, the paper explained the limitations of the traditional pricing approaches such as cost-based and competition-based approaches. Then it analyzed the relationship between customer acceptable price and perceived quality. Finally it proposed the pricing model based on customer value. In the new pricing model, customer value is a trade-off between perceived quality and price. The result of this model implied that the optimal price is positively related to customer perceived quality. The paper provides a better explanation regarding the economic effects of product quality with value analysis approach to awaken managers' consciousness of continuous quality improvement.