The pricing elementary principles (4)

Good pricing management needs to consider its elementary principles, the facts that turn the best prices viable, which are:

First: The sales object price results from the value assigned to it by the customer.

The success of pricing is directly related to the value the customer assigns to the sales object.
As the Roman author Publius Syrus said in the 1st century BC, ‘The value of something is what the buyer is willing to pay.’

Second: The value assigned to an offer depends on the features inherent and added to it.

In marketing, an offer’s inherent feature is called intrinsic attribute, and the added one is extrinsic attribute.
Intrinsic attributes of an offering are its physical characteristics, such as size, weight, composition, flavor, color, packaging, and design, which serve to identify, among other aspects, its usefulness, cost, convenience, appearance, quality, durability, and sustainability. Extrinsic attributes are those associated with, but not inherent to, the offer, such as the price, the technical assistance, the delivery service, the warranty, the possibility of testing the offering, and the image of the product, brand, or company.
Any of these attributes can define the client’s preference.

Third: The value assigned by the customer depends on his value perception

There are attributes perceived and not perceived by the customer.
Perceived attributes are all those, real or imaginary, that the customer assigns to the offer. Unperceived attributes are those that, even though they exist, the customer does not perceive them as part of the offer.
For this reason, the value assigned to an offer does not result only from its ability to meet needs or desires but also from how the customer perceives it.
The attributes with that ability define the offer’s competitive advantage and support its pricing practices.

Fourth: The price charged is the offerer’s ultimate responsibility

Even in auctions or trades with price caps, the final responsibility for the sale price lies with the offerer. That is because he decides what to offer, when to offer, how to offer, and to whom to offer. Blaming the market or the competition makes no sense.
It is correct that there are situations where one must accept the price the circumstances impose. However, this is the end of the process. Many other stages precede this—from the product design to the post-sales services—and over which the offerer had or has control.

Therefore, it is right to say that the ideal price is the consequence of careful and long-term action that is entirely the offerer’s responsibility.

C. L. Eckhard, author of Pricing in Agribusiness: setting and managing prices for better sales margins.