Behavioral Pricing: Shifting The Paradigm

The value-based pricing model as well as the respective tools like conjoint analysis are still building on the assumption that customers behave like the famous ‘Homo economicus’ – perfectly informed selfish and rational decision makers with stable preferences. In other words, value-based pricing is leaving significant margins on the table, as it is not really capturing the psycho-logics and predictable mistakes in human purchase decisions. Behavioral Pricing is equally well equipped to develop an optimal pricing strategy as it is to provide appropriate tools to actually execute it. Besides helping to design more profitable pricing strategies, it will also help to minimize the famous clash between pricing and sales when strategy hits practice at the end of the day.