Key to Successful Pricing is to match the product or service with the customer’s ‘Value Perception’
written by kumar subramanianon September 20, 2018


In our previous posts, we discussed about how having the rights price structure for your Hotels and the implementation of Dynamic Pricing helps you focus on the Right Business Mix and win more Business without Leaving  Money on the table. We also discussed how can you maximize your Profits using, In this post, we would explain and discuss on the Customer’s Value Perception.





The key to successful pricing is to match the product or service with the customer’s VALUE PERCEPTION.  Perception is everything.


Key to successful pricing is to match value perceptions, such as what the customer understands your product to be in exchange of price paid.


I would like to share my experience here.  A couple of weeks ago, I was exploring a suburban shopping center when I decided to get a loaf of bread for dinner.  As I walked along the street I came to a supermarket.  Then across the road, I spotted a little bakery.  So, off I trundled to the bakery, “A wholegrain loaf please.”   I had committed to buying the loaf just by walking in the door.


Price was not important in my buying decision, something else was.  That ‘something else’ was perception.  Your customers’ perception of you can be more important than your price.


Why did I choose the little bakery over the supermarket – Perception! I perceived that the quality would be better.  But who’s to say that the supermarket didn’t have a product equally as good as, if not better than, the little bakery.


So could it be, that by focusing too much on price, we set up an expectation of a lack of quality in the customer’s’ mind?  And could it be, that by focusing too much on price, we create the impression that our service might be suspect?  Absolutely!


The key to successful pricing hinges on the buyer’s perception of value.  Value perception or ‘Utility’ is the customer’s assessment of all that they have received in comparison to what they have given.  So, they ask themselves, by giving up this much money, what am I getting by way of not just physical features but also overall benefits?




It doesn’t matter what you charge.  It is the customer’s’ perception of your price that matters.  If the customer thinks the price is too high in relation to the value delivered for the product or service, then they won’t buy.  If they think the price is too low, then again they might not buy – because, they may be suspicious of the quality in relation to the price.  The price may not feel right.


A customer perception of what is a ‘reasonable price’ is more important than what you want to charge for your product or service.  And the customer decides what’s reasonable based on perceived value for money, not price. It’s creating this perception of value that tells the customer the price is right.  I’m a firm believer that, in the long term, it’s always better to add perceived value to your product rather than reduce your prices.


Customers are more smarter these days, have more disposable income and have more choices than ever before.  The key to making the sale is to communicate VALUE!   Do it so strongly… that the price seems reasonable in relation to the product or service you’re offering.


As you might have read my earlier articles on pricing I had mentioned about behavior patterns  of the customers.  The goal of this is for you to understand what your customers are looking for and to decide if you are giving them what they want.  How do you think the customer is going to perceive the value of this exchange?


Of course, for a customer, the more they get and the less they pay, the higher their perception of value.  In other words, if you want to increase your price, or create a new product for the same market segment or promote a new package, your marketing materials are geared so the customer believes they are getting added benefit if they are paying an increased price.


This is the reason why marketing materials for hotels list the benefits before they mention the price.  By the time the customers have read through the list of benefits they have a higher value perception so they see the price as reasonable, given the value they receive!


The key to making the sale is to communicate VALUE!   Do it so STRONGLY


Happy Selling!

No comments found.

Subscribe & Follow

  • Loading
  • Recent Tweets

  • Twitter

  • Facebook Posts

  • getRevOpt

  • Go beyond organic to Expenential Growth


    What makes Revopt Unique?

    Our unparalleled services helps hotels, chains and management companies develop collective
    knowledge of revenue management and upskill their teams to drive exponential revenue.

    • Exponential Revenue

      RevOpt helps you to go beyond organic to Exponential Growth by unlocking the true revenue potential to achieve optimal performance.

    • Automated Revenue
      Management System

      Custom tailored to your exact needs. Increased revenues 6%-18%. Multiply profits in as little as 15 minutes per day.  Outperform competitiors by 36% or more.

    • Long-term Profitability
      & Asset Value

      Tailor made revenue optimization solution to create a sustainable growth strategy to increase profitability & long-term asset value.

    • Expertise with
      unparallelled Services

      RevOpt best industry practices, proven techniques, latest trends & strategies that help hotels to challenge the status quo & outperform the competitors.