Correct price means correct value

Determining the “correct price” for any given product can lead to many mistakes for the company and its customers. I know in my profession, public accounting, determining the proper price to charge a customer can become a major issue. There are really no rebates or promotions as it is service based and price is determined by the magnitude of the client. There can be small promotional discounts or fee reductions, however that is rarely the case, and when discounts due occur it is often small. Discounts may also occur if there have been errors or setbacks on our company’s behalf. In those cases, we reduce the price charged to the customer because of the reduced value we have given. In looking at the “correct price” in my profession, it can be the price that matches the value we give to the customer. I think Drucker would agree that the price charged must be equal to the assumed value given to the customer. Customers will pay the price in which they believe they are getting value for the product or service. In my company’s case, customers will be unwilling to pay a high fee if they believ they are not getting added value in return. In that case, they would likely change accounting firms, and go to a firm that can match their price with their value.