Pricing Strategy Lab
Understand why cost-plus limitation: it is internally focused (what it costs you) rather than externally focused (what it is worth to customers).
5
Lessons in this module
Cost-plus pricing
Understand why cost-plus limitation: it is internally focused (what it costs you) rather than externally focused (what it is worth to customers).
Value-based pricing
Understand why implementation: (1) Quantify customer value (ask: what does this problem cost them without your solution?), (2) Price at 10-30% of that value (you get fair return; customer gets 70-90% of the value as savings), (3) Communicate the calculation explicitly ('This will save you X — I charge Y').
Competitive pricing
Understand why price competition risks: (1) Attracts price-sensitive customers who will leave for anyone cheaper, (2) Margin erosion — every discount reduces profit, (3) Vulnerability — someone with lower overheads can always undercut you.
Psychological pricing
Understand why three applicable techniques: (1) Charm pricing — ending in 9 or 99 exploits left-digit anchoring at zero cost.
Common pricing mistakes
Understand why price-as-quality signal: when a customer cannot directly assess quality before purchase (tutoring, design, cleaning), they use price as a heuristic.
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