Customer-based pricing is a pricing strategy that sets the price of a product or service based on the perceived value of that product or service to a specific customer segment. This strategy involves analyzing customer data to identify customer needs and preferences and using this information to create a pricing strategy that is tailored to those customers.
To implement this strategy, businesses typically follow three main steps: segmentation, targeting, and positioning. First, they segment their customer base into groups based on similar needs and preferences. Then, they target a specific customer segment that they want to serve. Finally, they position their product or service as offering unique value to that target customer segment, and set the price accordingly.
Customer-based pricing can help businesses improve customer satisfaction, profitability, and market positioning by offering tailored products and services that meet the specific needs and preferences of their target customers. This approach can lead to increased customer lifetime value and positive word-of-mouth referrals, making it an attractive pricing strategy for businesses looking to grow their customer base.