Perceived Value

What is a 'Perceived Value'

The worth that a product or service has in the mind of the consumer. The consumer's perceived value of a good or service affects the price that he or she is willing to pay for it.
For the most part, consumers are unaware of the true cost of production for the products they buy. Instead, they simply have an internal feeling for how much certain products are worth to them. Thus, in order to obtain a higher price for their products, producers may pursue marketing strategies to create a higher perceived value for their products.

BREAKING DOWN 'Perceived Value'

Perceived value is often used with perfumes, for example. Perfumes tend to be associated with a glamorous celebrity in order to create a mystique and perception of luxury. Alternatively, they may be the subject of elaborate and expensive advertising campaigns to create a strong image for the perfume. Consumers commonly do not realize that the costs of production for perfumes are relatively low. Thus, while the cost of production for perfume may be only a few dollars, the perceived value of a perfume can be far greater.

RELATED TERMS
  1. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  2. Full Value

    The total worth of a financial instrument or organization. Full ...
  3. Expected Value

    Anticipated value for a given investment. In statistics and probability ...
  4. Relative Value

    A method of determining an asset's value that takes into account ...
  5. Rich Valuation

    An asset that is being valued by investors at a very substantial ...
  6. Subjective Theory Of Value

    The idea that an object's value is not inherent, and is instead ...
Related Articles
  1. Investing Basics

    Understanding The Time Value Of Money

    Find out why time really is money by learning to calculate present and future value.
  2. Markets

    The 4 Basic Elements Of Stock Value

    Investors use these four measures to determine a stock's worth. Find out how to use them.
  3. Active Trading

    Warren Buffett: How He Does It

    We look at the Sage of Omaha's methodology for evaluating value stocks.
  4. Options & Futures

    Finding Undiscovered Stocks

    Wall Street tends to focus on large cap stocks, leaving other stocks under-followed and undervalued.
  5. Markets

    Intangible Assets Provide Real Value To Stocks

    Intangible assets don't appear on balance sheets, but they're crucial to judging a company's value.
  6. Fundamental Analysis

    Niche: How it Works and Makes Money? (FB, PG)

    Find out how Niche is revolutionizing the advertising industry by connecting corporate brands with social media stars on sites such as Vine and YouTube.
  7. Economics

    What are Business Activities?

    Business activities are any actions in which a company engages to make a profit.
  8. Fundamental Analysis

    Is Ford's Emoji Marketing Method Successful? (F)

    Learn how Ford used emoji-based marketing to promote its 2015 Focus model, and find out about the performance of the campaign and its effect on unit sales.
  9. Fundamental Analysis

    How to Make Money in Augmented Reality

    Discover how advertisers use augmented reality content to engage consumers and boost sales. Augmented reality allows consumers to view real-life, real-time ads.
  10. Investing News

    Spring: How it Works and Makes Money

    Read about Spring, a customer loyalty program and digital advertising company, and learn more about how it connects retailers and consumers.
RELATED FAQS
  1. Why is product differentiation important in today's financial climate?

    Product differentiation is essential in today's financial climate. It allows the seller to contrast its own product with ... Read Full Answer >>
  2. What are examples of economic values in use today?

    The education sector is one of the areas that demonstrates the concept of economic value. Students attach different values ... Read Full Answer >>
  3. Is a financial advisor allowed to pay a referral fee?

    A financial advisor is allowed to pay a referral fee to a third party for soliciting clients. However, the Securities and ... Read Full Answer >>
  4. How does a long tail become profitable?

    A long tail becomes profitable because the costs to produce, market and distribute a product or service in a niche are low, ... Read Full Answer >>
  5. How do companies with a large product portfolio use BCG Analysis?

    BCG analysis is used to evaluate an organization's product portfolio in sales planning and marketing. It is specifically ... Read Full Answer >>
  6. What are the similarities between product differentiation and product positioning?

    Product differentiation and product positioning are important elements in a marketing plan, and most marketing strategies ... Read Full Answer >>
Hot Definitions
  1. Yield To Maturity (YTM)

    The total return anticipated on a bond if the bond is held until the end of its lifetime.
  2. Junk Bond

    A colloquial term for a high-yield or non-investment grade bond. Junk bonds are fixed-income instruments that carry a rating ...
  3. Discounted Cash Flow (DCF)

    Discounted cash flow (DCF) is a valuation method used to estimate the attractiveness of an investment opportunity.
  4. Capital Expenditure (CAPEX)

    Capital expenditure, or CapEx, are funds used by a company to acquire or upgrade physical assets such as property, industrial ...
  5. Amortization

    1. The paying off of debt in regular installments over a period of time. 2. The deduction of capital expenses over a specific ...
  6. Operating Margin

    A ratio used to measure a company's pricing strategy and operating efficiency.
Trading Center