Companies often sell new products too cheaply. Understanding benefits as the customer sees them can help manufacturers set the right price.

Pressure on prices remains strong, but automatically going for the lowest one isn't always smart; companies often set them too low, especially to gain market share when introducing new products. This mistake can be costly—once a customer determines the value of an offering, its price becomes harder to raise. When Mazda introduced its Miata sports car in 1990, for example, customers thought it was worth more than its suggested retail price of $13,800. Mazda dealers saw what the manufacturer didn't and pocketed "market price adjustments" representing the $2,000 to $3,000 difference between the price of the car and what customers were willing to pay for it.

A tool like the one in the exhibit, which compares value to cost, can help manufacturers set the right price. For more details, read "Setting value, not price."