Here’s the point about value, it must be looked at from the point of view of the end user.
A better way to describe this is as willingness to pay (WTP). The WTP refers to the maximum amount someone is willing to pay. It is a measure of the perceived value that the product or service provides to that someone.
By understanding the WTP you can then go about determining your optimal price point with a view to maximizing profits. If you price above the WTP you won’t transact. If you price below, you will transact. How much of the value that you created goes to the end user, that is, the difference between their WTP and your price point and how much goes to you?
This is the dance.
Now willingness to pay is influenced by a variety of factors. The Harvard Business Review says that there are up to 30 factors that influence WTP. Quality is one, and it is considered the most influential factor.
What factors are you focused on delivering?
