How Can I Apply Value-Based Pricing?
There are three key components to value-based pricing: perceived value, the actual price, and the cost per ticket for the event.
Perceived value is what the customer thinks they will get out of your event. Here it is perception, as much as reality, that drives the transaction.
Next comes the actual price of your ticket. The actual price — which can be greater or less than the perceived value — is what the customer actually pays. Ideally, the actual price is as close as possible to the perceived value (without going over). When the actual price is below the perceived value, you’ve created what is known as “consumer surplus,” or the excess value the consumer gets above the actual cost of the good.
Finally, there is the per ticket cost to you for putting on the event. This completes the triad of value-based pricing. Taken together, these three components give you a full picture of the underlying economics of your event.
In the value-based pricing model, your customer is comparing perceived value and price — and you’re using your cost per ticket to determine the baseline price for breaking even. Put simply, if the customer’s perceived value is higher than your ticket price, then your customer will decide to purchase. And if your cost per ticket is lower than that price, you will make money
Read complete article here: