Michael jones owns a web design firm. the way michael prices his products is to determine what consumers are willing to pay, and then he backs off a bit to provide a cushion. the method that michael used to determine his prices is called:

Value based pricing. Value-based pricing is not based on overhead cost like material or labor costs. Instead, valued-based pricing depends on the consumers' perception of the value of the product i. e the seller's prices are based on the value of the product as perceived from the customer's perspective. Here, the value of the commodity is not determined by summing up the costs of production, rather it depends on not just the product's uniqueness but something even deeper: Customer's emotion! Prejudice! Or if/she has a staunch preference say for a certain brand. This type of pricing strategy is common in the fashion industry, the automotive industry, name-brand pharmaceuticals, and personal care.

Ihope this answers your question