Value Pricing is a method of pricing that sets the price of a product or service at the level at which the customer is willing to pay. This is contrasted by the cost method of pricing that determines the price of the product by adding the cost of material, time, overhaed and profit.

Value pricing is used by many woodworkers and cabinet makers. For example, woodworkers who produce original peices, similar to artists, can price their work according to how much the buyer wants to pay. The more 'famous' the artists or woodworker becomes, the more the value the product holds.

As a woodworker, given enough time, I can recreate a chair made by Sam Maloof, but I will never be able to sell it for the same price even though they may be almost identical. The value to the buyer is not in the chair itself, but in the creator of the chair.

Granted, most of us will never become famous enough to charge extra because of our name, but there are other ways to put value into the product. If you become well known in your community that what you build is up to a certain standard, or provide excellent service, or provide a garantee of some sort, these qualities enhance value of your product.

Cabinet makers can also price according to preceived value. When pricing a kitchen for example, a higher price can be attached to the value of the kitchen due to the fact that the enhanced kitchen will make the home worth a certain amount. This is becomes more true with a higher richer clientele.

Even if you think that there is so much competition in your market that you cannot price any higher without losing customers, you should re-evaluate your situation. I am sure that you can think of many products that you buy that you would never buy the cheapest version. Think about why you do this. Is it because of quality, a certain name brand that shows prestige, of a warranty?

I encourage you to look again at the product you are producing. Maybe you have been pricing according to the cost based method but perhaps it is possible to value price your product. Think of ways of how to increase the percieved value of your product to your potential customer.