Value-Based Pricing System Using Fair-Value Line Analysis
Find Innovative SolutionsGenerate Solutions
Solution Overview
Problem
Existing methods fail to effectively determine a competitive price for products based on customer perceived value, as they do not adequately account for differences in worth among competing products and do not provide a strategic pricing approach that reflects a product's value relative to others in the market.
Innovation Solution
A system and method that combines cost-in-use analysis and importance-performance analysis to calculate an overall weighted performance score for products, using a Fair-Value Line and monetary coefficients to assess the worth of incremental improvements, and generates graphic displays like the Value Map and Value-Pricing Chart to determine a suitable price based on customer perceived value.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Measurement precision
If traditional cost-in-use analysis or importance-performance analysis is used separately, then analysis simplicity is maintained, but the ability to determine strategic pricing based on customer perceived value is insufficient
Solution Approach 1:
The patent combines cost-in-use analysis and importance-performance analysis into a unified framework. The system integrates multiple data sources including customer surveys, product specifications, and cost data to create a comprehensive value assessment model that determines strategic pricing while accounting for both customer perceptions and actual product attributes.
Solution Approach 2:
The analysis is segmented into distinct components: customer-perceived attributes, technical attributes, cost-of-use factors, and competitive positioning. Each segment is analyzed separately and then integrated through weighted scoring to determine the final value-based price, allowing manageable complexity while achieving comprehensive results.
2Measurement precision
If comprehensive product attributes and cost data are collected for all competing products, then pricing accuracy based on customer value is improved, but data collection and processing complexity increases
Solution Approach 1:
The system performs preliminary data collection and organization by gathering customer survey results, product specifications, and cost data before the actual pricing analysis. Data structures and weighting schemes are pre-established based on product categories, enabling faster processing when new products are evaluated.
Solution Approach 2:
The system uses parameter weighting to prioritize the most influential attributes and cost factors. By adjusting weights based on customer survey results and market conditions, the system focuses computational resources on the most significant variables, reducing processing time while maintaining accuracy.
3Adaptability or versatility
If a Fair-Value Line is established to represent the relationship between cost and performance, then strategic pricing capability is improved, but the complexity of data visualization and interpretation increases
Solution Approach 1:
The patent transforms multi-dimensional pricing considerations into a two-dimensional visualization by plotting products on a graph with performance on one axis and cost on the other. The Fair-Value Line serves as a reference that captures the optimal trade-off relationship, allowing complex multi-factor analysis to be represented and interpreted in a simple visual format.
Data Source
AI summary
A system, method, and program product is described that is constructed to establish a database of market information, relating to a target product and its competitors in the market. The database is processed to allow the user to establish a price for the target process based on customer perceived value and to display the processed information in several useful charts and tables for product value comparison, appraisal, and pricing.