Perceived Value

AAA

DEFINITION of '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.

INVESTOPEDIA EXPLAINS '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. 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.
  2. Active Trading

    Warren Buffett: How He Does It

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

    Finding Undiscovered Stocks

    Wall Street tends to focus on large cap stocks, leaving other stocks under-followed and undervalued.
  4. Investing Basics

    Understanding The Time Value Of Money

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

    What types of consumer goods demonstrate the price elasticity of demand?

    Learn how the price elasticity of demand is more sensitive for some types of consumer goods than others, and see what factors most influence elasticity.
  7. Fundamental Analysis

    Google Ads Vs. Facebook Ads

    Universal access to the internet through smartphones, tablets and computers has driven the success of numerous companies. Most notably, Google and Facebook have witnessed staggering growth as ...
  8. Entrepreneurship

    How does a customer base dictate goodwill?

    Find out how a customer base dictates the value of the goodwill by providing a ready market for its products and spreading the word about the firm.
  9. Entrepreneurship

    How do companies like ClickBank help websites make money?

    Find out how sites such as ClickBank help websites make money by offering the opportunity for vendors and affiliates to promote websites and products.
  10. Personal Finance

    How Shazam Makes Money

    Prior to universal access to digital technology, identifying music in restaurants, bars, or stores was difficult to nearly impossible. Founded in 2000, Shazam provided a readily-available solution ...

You May Also Like

Hot Definitions
  1. Command Economy

    A system where the government, rather than the free market, determines what goods should be produced, how much should be ...
  2. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  3. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  4. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  5. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  6. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
Trading Center