Over the weekend I had the privilege of interacting with a group of budding product managers on the topic of saas-pricing and pricing models

An important question that was raised in the session was the difference between cost-plus and value-based pricing.

Below is my simple representation of how the 2 models differ:

“While cost-plus pricing starts from the Product and ends with the customer, value-based pricing looks at it from the opposite direction”

Being customer-centric and deriving the product value from the customer’s perspective is the key to getting your ideal price point.