A case study of value-based pricing: “Italian prosecutors have uncovered that luxury fashion brands, including Dior and Armani, have been exploiting migrant workers in Italy to produce their high-end handbags at extremely low costs...
The investigation revealed that a Dior handbag, which retails for $2,780, was produced for just $57. ” Dior and Armani have modeled that their brands deliver so much value that they can put the price tags that high. It is all about understanding pricing psychology and the fact that people buy these products because they are expensive.
So, the issue is not the cost of production, but the derivable value, and based on that capture value for the business. A business model encapsulates the essence of a firm by providing the compass on how to create value in the company. It is the logic of a business and when you commit to one, you have committed all the factors of production in that business to a destiny.
And as you execute that model, creating value in that firm, pricing becomes critical. Tekedia Mini-MBA edition 15 ( Sept 9 – Dec 7, 2024) has started registrations; register today for early bird discounts. Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and i nvest in Africa’s finest startups here . At Tekedia Mini-MBA, we have eminent pricing faculty to guide you. Yes, our Faculty members understand the physics of pricing, and how an efficient pricing playbook can unlock growth in a business.
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