Today while reading through the textbook, I came across the section regarding value-based pricing versus cost based pricing. Value pricing is when a company designs a product with ability to sell at a specific price. Where as cost-based pricing is creating a product a convincing the customer that it is worth the price. Both techniques are extremely common is the consumer world.

For value pricing the most stand-out example that I can think of would be Walmart, having their own line of products that they sell for cheaper. As well most products in Walmart are based around the concept of value based pricing, this is part of Walmart’s branding. In an article I read “Lessons Learned from Wal-Mart’s Pricing Strategy” they explain how Walmart’s mission of “low prices everyday” has been a main focus of theirs since the beginning. As well it explains that when prices were raised on some products there was blowback on the company, however they have corrected their practices to be more in-tune with their customers.

Cost based pricing can be a little more broad since most companies practice this method. Most companies begin with an idea for a product, a take a pricing scheme from there. This is where branding and postioning come in use, companies such as Nike need to convince customers that they should pay “x” amount for their product, instead of switching to a cheaper alternative or one with more value. As Sarah Barwin pointed out, Nike does a great job of adding value to their products through their branding and advertising.

All in all, value and cost based pricings are very interesting as they determine a companies strategy and location in the market.