Value Decoder
At most companies today, prices are set using a mix of "marking up costs," "I need to make this margin," "matching competitors" (even if rivals sell inferior products), "that's the way we always do it," "back of the envelope analysis," and my personal favorite, "it just happens." While deeply ingrained and easy-to-implement, the problem is the resulting prices have absolutely no relation to what consumers are willing to pay. Few of us think to ourselves, "The most I'm willing to pay for a refrigerator is 2 times what it costs KitchenAid to manufacture it."
The key to better pricing is to think like your customers. The Value Decoder is a 6 step framework designed to help managers better understand the key determinants of - and how to set - the right price for their products and services.

Value Decoder Analysis for
Step 1: Target Customers
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Step 2: Price and Characteristics of Close Substitute
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Step 3: Characteristics Relative to Competitors
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Step 4: Income
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Step 5: Price of Complementary Products
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Step 6: Market Environment Change
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Value Decoder Analysis Price
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