CPP Value-Based Pricing & Willingness to Pay 2

Question 1

Which approach segments customers for value-based pricing by identifying differences in the economic value each segment derives?

Accepted Answer

Economic value segmentation

Answer

Economic value segmentation groups buyers by the measurable monetary benefit they receive, enabling differentiated pricing across segments.

Question 2

A company's product saves industrial buyers $50,000/year in labor costs. The next best alternative costs $5,000. What is the maximum theoretical price using EVE?

Accepted Answer

$55,000

Answer

EVE = reference value + differentiation value = $5,000 (competitor price) + $50,000 (incremental saving) = $55,000 theoretical ceiling.

Question 3

What is the primary risk of setting price equal to full economic value in a B2B transaction?

Accepted Answer

The buyer captures no consumer surplus, reducing incentive to switch

Answer

Capturing 100% of economic value leaves the buyer with zero surplus, providing no financial motivation to switch from the incumbent solution.

Question 4

In value-based pricing, a 'reference value' is best defined as:

Accepted Answer

The price of the next best competitive alternative available to the buyer

Answer

The reference value anchors EVE calculations as the price the customer would pay for the best substitute if they did not buy from you.

Question 5

Which research technique uses hypothetical purchase scenarios to estimate price sensitivity without directly asking 'how much would you pay?'

Accepted Answer

Discrete choice modeling / choice-based conjoint

Answer

Discrete choice modeling presents respondents with realistic trade-off scenarios, indirectly revealing WTP through their choices.

(CPP) Certified Pricing Professional Practice Test

(CPP) Certified Pricing Professional Practice Test

CPP Value-Based Pricing & Willingness to Pay 2