Value pricing is a strategy where a business sets the price of its products or services based on the perceived value to the customer rather than the cost of production. This approach focuses on understanding what customers are willing to pay, allowing companies to capture more value and enhance customer satisfaction. In value pricing, companies often conduct market research to gauge customer preferences and willingness to pay. This method contrasts with traditional pricing strategies, such as cost-plus pricing, where prices are determined by adding a markup to the cost of production. By aligning prices with customer value, businesses can foster loyalty and increase profitability.