Customer perceived value is a term that refers to the way customers view a product or service. It is important for business owners to understand CPV because it can help them make their products stand out from the competition.
The ratio of perceived benefits to price is a product’s value and can be calculated by comparing the actual product benefits against the costs incurred when using it. Typically, businesses want to increase the perceived benefits and reduce the cost when delivering a good or service.
There are three kinds of perceived benefits: physical, logical, and emotional. These benefits can range from saving money to making customers feel good.
Buying a new suit will help you stay warm (physical), land that new job (logical), and save you from the embarrassment of walking around naked (emotional).
When comparing products, customers consider their perceived value. They also compare the value of a product to other similar items on the market.
In addition, they look at the price of a product and how it fits in with their own budgets. For example, they might decide to buy a Louis Vuitton bag for $600 instead of a less expensive handbag.
Getting a good balance between price and value is key to building trust with your customers and achieving success in the marketplace. It’s a challenge to maintain the optimal value-to-cost ratio for each product and market. It’s important to find the perfect balance so that you can earn a loyal following of customers.