Pricing

2. Your Offering

Assess how what you offer compares with what else is available.

2.1 Break down what you offer (or could offer) into all its components.

• The core product itself. For example, a car.
• Additional product components.For example, number plates and the owner's manual.
• Customisable features of the product.For example, choice of colour and extras such as air-conditioning.
• Additional services.For example, delivery and recovery services.
• Additional elements of the overall deal.For example, a financing package and guaranteed buy-back price.

2.2 List all the benefits that customers perceive each component as offering. For example:

• Quality and reliability.
• Convenience.

2.3 Assess how much each benefit is worth to your target customers, using what you know about the market (see 1), and additional market research if necessary.

Different benefits will often have different values for different market segments. For example:

• Reliability will be more important to a customer who uses your product in a mission critical application.
• A product will be worth more to a customer who can make a large profit from distributing or processing it.

2.4 Customers' perceptions of value for money will depend on what they expect their total costs to be.

For example, the costs of car ownership include depreciation, fuel costs and servicing, as well as the purchase price.

• Providing lifetime value for money is more important if you aim to get repeat business from the same customer.