What is "value-based pricing"?

What is the difference between cost-based pricing and value-based pricing?

Cost-based pricing is a model where you work out how much a product or service costs to deliver and set your price accordingly. As long as you factor in all your overheads and sales & marketing costs, you will be able to work out your profit margin.

Value-based pricing is a very different model, and people often struggle to get their heads round it, so I use this story to explain what it means...

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