Hi,

Value-based pricing can be done in 2 ways:

• For existing products, you identify what is the economic value and perceived value for the customer. Also, you compare the value proposition and features of your product vs. the VP of your competitors. If you have a significant difference in value prop - you have to define how much value you propose to the customer in $ terms. (e.g. your product may have additional customer support, better packaging, additional features and thus should be priced hire. Or it should be priced the same and you will win the market share due to these differences)
• For the new products / markets, you can calculate the closest alternatives and think how much additional value we provide by replacing them. Think of the discount airlines compared to trains or buses

Best

Hi,

Kotler & Keller (2016) define Value Pricing when companies offer a reasonably low price for a high-quality offering (which has more of an impact on the operational model). It seems to me Perceived-Value Pricing is more suited to your situation as you will need to factor in several elements before being able to price the new invention/product (i.e. product performance, warranty, quality, customer care post-purchase, etcetera). These factors are value-added, but also incur costs on the buyer's end.

Additionally, when selecting the Final Price, you will need to wrap your head around how the product and price will impact the buyer, how would it affect the company after the sale, what risk is buyer going to take on board, especially true when making a big purchase.

I would study the case of Google's Glass product. Not an identical case, however, there are great lessons learnt on Pricing.

References:

1. Kotler, P., Cunningham, M. H., & Keller, K. L. (2008). A framework for marketing management. Toronto: Pearson Prentice Hall.