Definition
Nagle & Holden: “Cost-based pricing adds a markup to cost; value-based pricing sets price according to the customer’s perceived value.”

Introduction
One starts with the factory, the other with the customer. Modern marketing prefers the latter.

Explanation

Cost-Based: Price = Cost + Margin.

Value-Based: Price = Perceived Benefit − Perceived Cost.

Value approach requires research into customer willingness to pay.

Key Takeaways

Cost sets floor; value sets ceiling.

Value-based pricing drives profit and loyalty.

Real-World Case – Starbucks prices coffee for experience, not beans—value-based premium.
Reference: https://www.starbucks.com

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