Value-based pricing refers to:

A) a pricing strategy that takes into account the costs and benefits experienced by the customer that extend beyond the initial purchase price.
B) a pricing strategy where customers' perceptions of value guide the price.
C) a pricing strategy where prices are determined based on net value of each component of a product or service.
D) a pricing strategy based on a labour and material pricing formula.

Value-based pricing is a pricing strategy where customers' perceptions of the value of a product or service guide the price. The aim is to set a price that customers are willing to pay based on the benefits and value they receive from the product or service. It takes into account the costs and benefits experienced by the customer that extend beyond the initial purchase price, making it different from cost-based pricing (option D). Option C describes a component pricing strategy, which is not the same as value-based pricing.