Marketing Canvas - Define your financial hypothesis

In a nutshell

When working with the Marketing Canvas, It is important to formulate your financial goal(s) as an hypothesis (Step 2). The assessment that will be done afterwards (Step 3) is measuring your ability to reach this goal without changing your current strategy. It is therefore highly important that you clarify your hypotheses

Financial hypotheses statement

FOR ACHIEVING NEXT YEAR REVENUE (……………) WHICH IS A …………… OF …………… COMPARE TO LAST YEAR, WE WILL:

• ACQUIRE …………… NEW CUSTOMERS

• LOSE ONLY …………… EXISTING CUSTOMERS

• HAVE AN AVERAGE MONTHLY TRANSACTION PER CUSTOMER OF ……………

• HAVE AN AVERAGE PRICE PER TRANSACTION OF ……………

Be clear

It is an hypotheses thus if it is not working you can revisit it. What is important is to understand how you will generate your revenues and more specifically what is different versus last year. Remember the magic revenue equation is YOUR REVENUE = THE CUSTOMERS YOU HAVE (NEW-LOST+EXISTING) x NUMBER OF TRANSACTION THEY DO PER MONTH x 12 x AVERAGE PRICE THEY PAY PER TRANSACTION.

• Will you acquire more new customers compare to last year? How much?

• Will you lose less customers than last year or more? How much?

• Will you stimulate your customers to buy more frequently? How much?

• Will you increase your average price they pay per transaction? How much?

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Each of these elements contribute positively or negatively to your revenue goal. How prepare are you to achieve this? Do you have the right elements in place? Do you have some brakes (elements against you)?

Let me give you an example: If you want to increase by 10% your average price, it probably means that you need to justify a premium versus the competition or correct a wrong pricing (too much discount or promotions). In both case, your brand might be a brake because it is perceived cheap by your customers.

PRICE INCREASE -> ASSESSMENT: BRAND IS A BRAKE BECAUSE PERCEIVED AS CHEAP -> IDEATION: HOW CAN I CHANGE THE VALUE PERCEPTION OF MY BRAND?

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Financial hypothesis for your Marketing Canvas

Marketing Canvas - Moments

Last update: 4/12/2024

In a nutshell

The Moments sub-dimension in the Marketing Canvas focuses on identifying and understanding the critical points in the customer journey before, during, and after engaging with your value proposition. These moments capture customer actions, thoughts, and emotions, revealing their objectives and pain points. Understanding these moments helps businesses design experiences that resonate with customers, foster loyalty, and improve satisfaction.

For example, Green Clean might analyze moments such as researching eco-friendly cleaning products, comparing options, purchasing a product, and using it at home. By understanding what customers think, feel, and do at each stage, Green Clean can tailor its messaging, support, and product experience.

Introduction

The Moments sub-dimension in the Marketing Canvas is part of the Journey category, focusing on mapping the customer’s experience with your brand. Moments are the key touchpoints where customers interact with your value proposition and form impressions of your brand. By understanding these moments in detail, you can align your strategies to meet customer expectations and create memorable experiences.

Unlike other elements that focus on broad strategies, Moments zooms into the specific instances that shape customer perceptions, ensuring that your value proposition delivers value consistently.

What are moments?

Moments are the specific instances in the customer journey where they engage with your brand or value proposition. These can occur before, during, or after a purchase, encompassing everything from initial awareness to post-purchase advocacy.

For example:

• Before Purchase: Researching sustainable cleaning products online.

• During Purchase: Comparing Green Clean to competitors and making a buying decision.

• After Purchase: Using the product and deciding whether to repurchase or recommend it.

Moments are characterized by:

1. Customer Observations: Based on real customer behavior and feedback.

2. Actions, Thoughts, and Feelings: Capturing what customers do, think, and feel at each touchpoint.

3. Customer Objectives: Understanding the goals customers aim to achieve during each moment.

Moments: an in-depth perspective

Mapping moments requires detailed insights into customer behavior, focusing on:

1. Observations and Identity: Moments must reflect real customer behaviors and identities, gathered through interviews and observations.

2. Comprehensive Coverage: Identifying all relevant moments before, during, and after engaging with your value proposition.

3. Customer Emotions and Actions: Capturing the thoughts, feelings, and actions of customers at each stage.

4. Customer Objectives: Understanding what customers aim to achieve during each moment and aligning your strategy accordingly.

For example:

• Observations: Green Clean might discover that customers feel overwhelmed by the variety of “eco-friendly” claims during research.

• Emotions: Customers may feel relief when they find a transparent and trustworthy brand.

• Actions: Comparing labels or searching for certifications like “EcoCert.”

• Objectives: Finding a safe and sustainable cleaning solution for their family.

Mental Models - Moments in the Marketing Canvas

Translating moments into action

To enhance the customer experience, businesses must identify and refine the moments that matter most to their audience. This involves:

• Mapping the Journey: Defining moments across all stages of the customer journey.

• Aligning with Objectives: Ensuring each moment supports the customer’s goals and minimizes friction.

• Optimizing Touchpoints: Improving interactions to meet customer expectations and create positive experiences.

Questions to consider:

• Have you based your moments on real customer observations and interviews?

• Have you identified moments before, during, and after the purchase?

• Do you understand what your customers think, feel, and do at each moment?

• Have you clearly identified the objectives your customers aim to achieve during each moment?

Statements for self-assessment

For a comprehensive evaluation of your understanding and application of the Moments concept, rate your agreement with the following statements on a scale from -3 (completely disagree) to +3 (completely agree):

1. Your moments have been defined based on customer observations and interviews. It reflects his/her identity.

2. You have identified all moments before, during, and after buying your value proposition.

3. For each moment, you have clearly identified what your customers think, feel, and do.

4. For each moment, you have clearly identified what are the customer objectives.

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Marketing Canvas Method - Journey - Moments

Interpretation of the scores

• Negative scores (-1 to -3): Negative scores indicate a lack of understanding or incomplete mapping of customer moments. This may result in missed opportunities to address customer needs, leading to friction in the journey and reduced satisfaction. Immediate action is needed to observe, analyze, and map customer behaviors more effectively.

• A score of zero (0): A neutral score reflects partial insights or an incomplete understanding of customer moments. While you may have identified some key touchpoints, gaps remain in addressing customer thoughts, feelings, or objectives. Further research and refinement are required to create a comprehensive journey map.

• Positive scores (+1 to +3): Positive scores suggest that you have a thorough understanding of customer moments and have effectively mapped their actions, thoughts, feelings, and objectives. This deep insight allows you to create seamless, satisfying experiences that align with customer expectations and foster loyalty.

Case study: Green Clean’s moments

• Misaligned Understanding (-3, -2, -1): Green Clean fails to map critical customer moments, focusing only on the purchase stage. The brand overlooks key interactions, such as research or post-purchase usage, resulting in a disconnected customer experience that fails to meet expectations.

• Surface Understanding (0): Green Clean identifies some customer moments but does not fully capture customer thoughts, feelings, or objectives. For example, while the brand recognizes that customers compare products, it does not address the emotional stress of choosing among eco-friendly options.

• Deep Understanding (+1, +2, +3): Green Clean comprehensively maps customer moments, from initial awareness to post-purchase advocacy. By identifying what customers think, feel, and do at each stage, the brand tailors its messaging, simplifies decision-making, and provides ongoing support. For instance, Green Clean offers an online guide to decoding eco-labels, addressing customer stress during the research phase and aligning with their objective of making informed choices.

Conclusion

The Moments sub-dimension is essential for understanding the key touchpoints that shape the customer journey. By observing real customer behavior, identifying actions, emotions, and objectives, and refining interactions, businesses can create seamless and satisfying experiences. A well-mapped journey fosters loyalty, trust, and advocacy, ensuring your value proposition resonates with customers at every stage.

Sources

1. Mental Models, Wikipedia, https://en.m.wikipedia.org/wiki/Mental_model

2. Google, Micro-Moments, https://www.thinkwithgoogle.com/marketing-resources/micro-moments/micro-moments-understand-new-consumer-behavior/

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Marketing Canvas - Proofs

Last update: 8/11/2024

In a nutshell

The Proofs sub-dimension in the Marketing Canvas focuses on the evidence and validation that support your value proposition. Proofs help build trust and credibility by demonstrating how your offering delivers on its promises, reducing customer uncertainty and reinforcing your brand’s reputation. This evidence may include testimonials, case studies, certifications, third-party endorsements, and other trust-building tools.

For example, Green Clean might use certifications like "Certified Organic" or endorsements from environmental organizations to validate its claims of sustainability and safety, reassuring customers of its commitment to quality and eco-conscious practices.

Introduction

The Proofs sub-dimension is a vital element of the Value Proposition category in the Marketing Canvas. It addresses the need to substantiate your claims with clear and credible evidence. In an age of increasing skepticism, especially around sustainability claims, providing proof is critical to gaining customer trust, avoiding greenwashing, and reinforcing your brand's reputation.

Proofs help bridge the gap between what a brand promises and what customers believe, ensuring alignment and confidence in your value proposition.

What are proofs?

Proofs are the tangible and credible elements that validate your value proposition, providing customers with the confidence to trust and invest in your offering. These can include:

• Operational Context: Demonstrations, examples, or case studies that show your value proposition in action.

• Clarification Tools: Detailed explanations, technical specifications, or visual aids that reassure customers about your product or service.

• Third-Party Endorsements: Recognized certifications, awards, or endorsements from trusted authorities.

• Brand Reputation: References to your brand’s history, achievements, or well-known attributes.

• Greenwashing Avoidance: Ensuring that your claims are transparent, accurate, and verifiable.

For instance, Green Clean might showcase customer testimonials, certifications like “EcoCert,” and its long-standing reputation for sustainable innovation to provide robust proof of its eco-friendly claims.

Laurent Bouty - Marketing Canvas Method - Proofs

Proofs: an in-depth perspective

To effectively reinforce your value proposition, your proofs must:

1. Show Operational Relevance: Provide real-world examples or demonstrations of how your product delivers value.

2. Reassure Through Clarity: Offer clear explanations or visualizations that address customer concerns.

3. Leverage Trusted Endorsements: Highlight third-party validations or certifications that strengthen credibility.

4. Reference Brand Reputation: Connect your value proposition to widely acknowledged elements of your brand’s history or achievements.

5. Maintain Integrity: Ensure your claims are truthful, avoiding exaggeration or greenwashing.

For example:

• Operational Context: Green Clean shares a case study showing how its products helped a customer reduce household toxins by 80%.

• Third-Party Endorsements: Certifications like “Leaping Bunny” verify its cruelty-free claims.

• Reputation: Green Clean highlights its recognition as a leader in sustainable cleaning solutions.

Translating proofs into action

Providing proof requires an intentional strategy to communicate and display evidence across all customer touchpoints. From marketing materials to customer service, every interaction should reinforce your value proposition with credible and relevant proof points.

Questions to consider:

• Have you demonstrated your value proposition in an operational context that customers can easily relate to?

• Have you clarified how your value proposition works to reassure potential customers?

• Are your claims backed by trusted third-party endorsements?

• Do you reference widely acknowledged elements of your brand’s reputation to reinforce your value proposition?

• Are you transparent in your claims, ensuring you avoid any perception of greenwashing?

Statements for self-assessment

For a comprehensive evaluation of your understanding and application of the Proofs concept, rate your agreement with the following statements on a scale from -3 (completely disagree) to +3 (completely agree):

1. You have presented your value proposition in an operational context that makes it possible to see the promised benefit(s).

2. You have provided elements to clarify exactly how the value proposition operates and reassure the customer.

3. Your value proposition is supported by means of a recognized third party: i.e., a celebrity ambassador, a label, or other trusted sources.

4. Your value proposition has made a direct reference to a widely acknowledged element of your brand's reputation.

5. Your value proposition avoids any form of Greenwashing.

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Marketing Canvas Method - Value Proposition - Proofs by Laurent Bouty

Interpretation of the scores

Negative scores (-1 to -3): Negative scores indicate a lack of sufficient or credible proof to support your value proposition. Customers may be skeptical of your claims, leading to reduced trust and missed opportunities to build loyalty. Immediate steps are needed to integrate credible and transparent evidence into your messaging.

A score of zero (0): A neutral score reflects uncertainty or incomplete application of proof elements. While you may provide some evidence, it is not compelling or consistent enough to fully reassure customers. Further development of proof strategies is necessary to strengthen customer trust and confidence.

Positive scores (+1 to +3): Positive scores suggest that your value proposition is well-supported by clear, credible, and impactful proof elements. Your evidence reassures customers, leverages third-party endorsements, aligns with your brand’s reputation, and avoids greenwashing. This strengthens customer trust and reinforces your value proposition.

Case study: Green Clean’s proofs

Misaligned understanding (-3, -2, -1): Green Clean fails to provide sufficient proof to support its claims, relying only on vague or generic statements. Without tangible evidence, such as certifications or case studies, customers are left skeptical of its eco-friendly promises, weakening trust and reducing purchase intent.

Surface understanding (0): Green Clean offers some proof, such as basic product descriptions or minimal certifications, but lacks consistency or depth. Customers may perceive the brand as credible but not fully reassured, limiting the impact of its value proposition.

Deep understanding (+1, +2, +3): Green Clean provides robust proof points, including certifications like “EcoCert,” testimonials from satisfied customers, and endorsements from environmental organizations. These elements demonstrate operational relevance, clarify its value proposition, and highlight the brand’s reputation as a sustainability leader, building strong trust and loyalty.

Conclusion

The Proofs sub-dimension is essential for building trust and credibility in your value proposition. By demonstrating your claims through operational context, third-party endorsements, and references to your brand’s reputation, you reassure customers and strengthen their confidence in your offering. Transparency and honesty are critical to avoiding greenwashing and maintaining integrity, ensuring that your proofs reinforce long-term loyalty and advocacy.

Sources

1. Neil Patel, Dominate your Market, https://neilpatel.com/blog/dominate-your-market/

2. HubSpot, Principles of Persuasion, https://blog.hubspot.com/sales/cialdini-principles-of-persuasion

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Marketing Canvas by Laurent Bouty

Marketing Canvas - Pricing

Last update: 24/11/2024

In a nutshell

The Pricing sub-dimension in the Marketing Canvas examines how your pricing strategy supports your value proposition, aligns with customer expectations, and reflects your brand positioning. Pricing is not merely a financial decision but a strategic tool that communicates value, differentiates your offering, and influences customer behavior toward sustainable choices.

For instance, a brand like Green Clean might emphasize pricing transparency and offer incentives for sustainable behaviors, such as discounts on refillable products, to align with its eco-friendly mission and customer expectations.

Introduction

The Pricing sub-dimension in the Marketing Canvas is critical to ensuring your value proposition is both competitive and aligned with your brand’s goals. A well-designed pricing strategy balances customer Willingness To Pay (WTP), perceived value, and cost structure while promoting sustainability. It ensures your offering creates more value than its cost and encourages customers to engage with your brand’s most impactful and sustainable options.

Pricing also reinforces brand positioning by reflecting the quality, exclusivity, or accessibility of your product or service.

What is pricing?

Pricing is the monetary expression of your value proposition, reflecting the worth of your product or service to customers. A strong pricing strategy:

• Communicates Value: Ensures that customers perceive the benefits of your offering as exceeding its cost.

• Reflects Willingness To Pay: Aligns with what customers are willing to pay for solving their problems.

• Covers Costs: Accounts for the full costs associated with delivering your value proposition.

• Supports Positioning: Aligns with your brand’s image and goals in the category.

• Promotes Sustainability: Incentivizes customers to choose sustainable options.

For example, Green Clean might set a premium price for its eco-friendly cleaning solutions to reflect their unique value while offering subscription discounts for refills to encourage long-term sustainable behaviors.

Pricing: an in-depth perspective

PRICING is a pivotal element of your marketing strategy that requires meticulous analysis due to its complexity and profound impact on value creation. In the Marketing Canvas Method, PRICING goes beyond simply competing with market rates for similar offerings. Instead, it focuses on leveraging pricing as a strategic tool to create or preserve value, propelling your brand upward on the economic value curve.

Perceived Price and the Value Curve

At the core of effective PRICING is the concept of the Perceived Price—how customers interpret the value of your offering relative to its cost. Understanding the standard pricing unit in your market is critical to analyzing your position.

For instance:

• In a supermarket, shampoos or soaps are typically priced per milliliter in Europe, while coffee is sold by weight.

• In the service industry, consulting services are often charged per hour or day.

Once the reference pricing unit is established, you can calculate the perceived price of your offering compared to competitors using the formula:

24 / (E - C) * (M7 - C) - 12

Where:

• E is the highest unit price in the market,

• C is the lowest unit price,

• M7 is your unit price.

This calculation helps determine your position on the value curve, indicating whether your PRICING strategy accelerates or impedes your business growth.

Example: Artisanal Coffee

Suppose your artisanal coffee beans are priced at $15 per pound (M7). In your market, the highest-priced coffee is $20 per pound (E) and the lowest is $10 per pound (C). Applying the formula provides insight into where your pricing strategy positions you on the value curve.

A strong position on the curve suggests your pricing reflects perceived value, while a weak position may signal the need for adjustment to better align with market conditions and customer expectations.

PRICING and Perceived Value

PRICING is intrinsically tied to how customers perceive the value of your product or service:

• If your offering is seen as a commodity, customers will gravitate toward the lowest price.

• Conversely, if your unique value proposition is clear, customers may accept higher prices that reflect this differentiation.

For example:

• Starbucks customers willingly pay premium prices because they perceive value beyond the coffee itself—a unique experience.

• A luxury fashion brand can command high prices because it offers a transformational experience, making cost secondary for its target audience.

Key Principles of an effective PRICING strategy

An effective PRICING strategy should adhere to the following principles:

1. Be Value-Based: Align your price with your position on the economic value curve.

2. Consider Market Conditions: Analyze competitor pricing and customer price sensitivity to ensure relevance.

3. Enhance Your Brand’s Purpose and Positioning: Reflect your brand identity. For instance, a disruptive brand might challenge market norms with innovative pricing.

4. Strengthen Your Value Proposition: Reinforce the unique aspects of your offering to justify the price.

Ignoring these principles can lead to a PRICING strategy that acts as a brake on your progress, rather than an accelerator.

Assessing your pricing strategy

To evaluate your pricing, consider a scoring scale from -12 to +12:

• 12 represents a low price that may correspond to a low perceived value.

• +12 indicates a high price with a high perceived value.

For example:

• If your artisanal coffee is priced above average market rates but customers appreciate its unique quality and sourcing, resulting in a high perceived value, your pricing might score a +8 or higher on this scale.

• On the other hand, a low-priced coffee with limited differentiation might score closer to -8 or -12, reflecting a misaligned pricing strategy.

Value Map that helps you understand your current pricing situation

Translating pricing into action

A strong pricing strategy should consistently reflect your value proposition and support customer decision-making. Pricing decisions should be based on insights into customer behavior, cost structures, and competitive analysis, while integrating sustainability as a core principle.

Questions to consider:

• Does your pricing strategy create more value than the cost for your customers compared to alternatives?

• How well does your pricing align with your customers’ Willingness To Pay for solving their problems?

• Does your pricing account for all costs associated with delivering your value proposition?

• Is your pricing consistent with your brand positioning and category goals?

• How does your pricing strategy encourage sustainable choices?

Method for self-assessment

For a comprehensive evaluation of your understanding and application of the Pricing concept, rate your agreement with the following statements on a scale from -3 (completely disagree) to +3 (completely agree):

1. Your value proposition is creating more value than the cost of the next best alternative for your customers.

2. Your pricing strategy is based on customer Willingness To Pay (WTP) for solving their problem.

3. Your pricing strategy takes into account all costs associated with your value proposition.

4. Your pricing strategy is aligned with your brand positioning and your goals for the category.

5. Your pricing strategy encourages customers towards the most sustainable option available.

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Marketing Canvas Method - Value Proposition - Pricing by Laurent Bouty

Interpretation of the scores

Negative scores (-1 to -3): Negative scores suggest that your pricing strategy is misaligned with customer expectations, cost structures, or brand positioning. This can result in undervaluing your product, losing competitive advantage, or failing to support sustainability goals. Immediate action is required to reassess your pricing approach.

A score of zero (0): A neutral score reflects uncertainty or incomplete alignment in your pricing strategy. While some elements may be in place, such as cost coverage or WTP analysis, they lack cohesion or fail to drive sustainable behaviors effectively. Further refinement is needed to strengthen your strategy.

Positive scores (+1 to +3): Positive scores indicate that your pricing strategy effectively communicates value, aligns with customer WTP, covers costs, and supports brand positioning. Additionally, your pricing encourages sustainable choices, reinforcing your commitment to long-term impact and differentiation.

Case study: Green clean’s pricing

Misaligned understanding (-3, -2, -1): Green Clean’s pricing fails to reflect the value of its eco-friendly products, either undervaluing them compared to competitors or setting prices that exceed customer WTP. The lack of cost alignment and sustainability incentives weakens the brand’s positioning and reduces customer appeal.

Surface understanding (0): Green Clean’s pricing covers basic costs and aligns with industry averages but lacks differentiation or focus on sustainability. Customers may perceive value but are not incentivized to choose more sustainable options, limiting the brand’s impact and competitive edge.

Deep understanding (+1, +2, +3): Green Clean’s pricing highlights the value of its unique features, such as non-toxic ingredients and zero-waste packaging, while aligning with customer WTP. By offering subscription discounts and promoting refillable packaging, the brand encourages sustainable behavior. This strategy reinforces its eco-friendly positioning, builds customer loyalty, and ensures profitability.

Conclusion

The Pricing sub-dimension is a strategic tool for aligning your value proposition with customer expectations, brand positioning, and sustainability goals. By creating value beyond cost, basing pricing on WTP, and incentivizing sustainable choices, businesses can enhance their competitive edge, foster customer loyalty, and achieve long-term success.

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Sources

1. Market and Economic Value, Laurent Bouty, https://laurentbouty.com/blog/2019/marketing-canvas-market-and-economic-value

2. Neil Patel - 5 Psychological Studies on Pricing That You Absolutely MUST Read, https://neilpatel.com/blog/5-psychological-studies/

3. The Ultimate Guide to Pricing Strategies, https://blog.hubspot.com/sales/pricing-strategy

4. Replyco, 23 Pricing Strategies Any eCommerce Seller Can Use to Increase Sales, https://replyco.com/brainery/23-pricing-strategies-for-ecommerce-sellers/

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Marketing Canvas by Laurent Bouty

Pricing Sensitivity Drivers From Thomas Nagle

Pricing is a science and it is most of the time not considered as such except by marketing veterans. Below you can find a check-list for assessing sensitivity of pricing changes on customers.

• Reference Price Effect – buyer’s price sensitivity for a given product increases the higher the product’s price relative to perceived alternatives. Perceived alternatives can vary by buyer segment, by occasion, and other factors.

How important is the expenditure (portion of income or monetary terms) for the buyer?

• Perceived Risk Effect – buyers are less sensitive to the price when it is difficult to compare it to potential alternatives.

How difficult is it for buyers to compare the offers of different suppliers?

Can we compare attributes of products by observation or should we purchase and consume to learn what it offers?

Is the product new or innovative?

Is the product highly complex?

Are the prices of different suppliers easily comparable?

• Switching Costs Effect – the higher the product-specific investment a buyer must make to switch suppliers (monetary and non-monetary), the less price sensitive that buyer is when choosing between alternatives.

What would be the cost of changing supplier?

For how long are buyers locked in by those products?

Have customers invested heavily in product related services (like training, customisation, ...) that would have to be repeated if they chose to switch? (example is iphone: you need to change your mp3 library from iTunes to something else or your cover, ...)

• Price-Quality Effect – buyers are less sensitive to price the more that higher prices signal higher quality. Products for which this effect is particularly relevant include: image products, exclusive products, and products with minimal cues for quality.

• Size of Expenditure Effect – buyers are more price sensitive when the expense, accounts for a large percentage of buyers’ available income or budget.

How important is the expenditure (portion of income or monetary terms) for the buyer?

• End-Benefit Effect – the effect refers to the relationship a given purchase has to a larger overall benefit, and is divided into two parts: Derived demand: The more sensitive buyers are to the price of the end benefit, the more sensitive they will be to the prices of those products that contribute to that benefit. Price proportion cost: The price proportion cost refers to the percent of the total cost of the end benefit accounted for by a given component that helps to produce the end benefit (e.g., think CPU and PCs). The smaller the given components share of the total cost of the end benefit, the less sensitive buyers will be to the component's price.

How economically or psychologically important is the end-benefit that buyers seek from the product.

How price sensitive are buyers to the cost of that end-benefit?

What portion of the end-benefit does the price of the product account for?

• Shared-cost Effect – the smaller the portion of the purchase price buyers must pay for themselves, the less price sensitive they will be.

Does the buyer pay the full cost of the product?

• Perceived fairness Effect– buyers are more sensitive to the price of a product when the price is outside the range they perceive as “fair” or “reasonable” given the purchase context.

How does the product's current price compare with prices people have paid in the past for similar products?

Can any price difference be justified based upon a plausible cost difference?

• Price Framing Effect – buyers are more price sensitive when they perceive the price as a loss rather than a forgone gain, and they have greater price sensitivity when the price is paid separately rather than as part of a bundle.

Do customers see the price as something they pay to avoid loss or to achieve gain?

Is the price paid as part of a larger cost or does it stand alone?

Is the price perceived as an out-of-pocket cost or as an opportunity cost?

Extract from The Strategy and Tactics of Pricing, 5th Edition. Thomas Nagle, John Hogan, and Joseph Zale. Chapter 6, Exhibit 6-4, http://en.wikipedia.org/wiki/Pricing_strategies

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Read more on pricing here

Read our article on economic value here

Discover pricing dimension in the Marketing Canvas Method here

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Marketers, Pricing can often be a confusing topic