Barriers to implementing value-based pricing in industrial markets: A micro-foundations perspective |
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| Affiliation: | 1. Aalto University, School of Science, Department of Industrial Engineering and Management, P.O. Box 15500O, FI-00076 Aalto, Finland;2. Lappeenranta University of Technology, School of Business and Management, P.O. Box 20, 53851 Lappeenranta, Finland;1. College of Business, Florida Atlantic University, 777 Glades Road, Boca Raton, FL 33431, USA;2. Durham University Business School, Durham DH1 3LB, UK;3. Department of Marketing, University of Miami, P.O. Box 248147, Coral Gables, FL 33124, USA;1. European University Viadrina, Große Scharrnstraße 59, D-15230 Frankfurt (Oder), Germany;2. Freie Universität Berlin, Marketing-Department, Arnimallee 11, D-14195 Berlin, Germany;3. Aalen University, School of Business, Beethovenstr. 1, D-73430 Aalen, Germany |
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| Abstract: | Value-based pricing has the potential to improve differentiation, profitability, and value creation for industrial firms and their customers. However, while most of the pricing research considers the ways organizations set or get value-based prices, only few studies consider how individual managers influence the pricing process and what prevents them from setting and getting value-based prices. This is of critical concern, since it is not just organizations, but individuals within organizations who make pricing decisions—and their decision-making is influenced by institutional pressures such as socially prescribed norms, rationalized meanings, and beliefs about profitable approaches to pricing. This study addresses this gap in the current knowledge by adopting a micro-foundations perspective to pricing, and focusing on the barriers that individual managers encounter when implementing value-based pricing. Drawing on a single case study in a global industrial firm, and from interviews with 24 managers, this study identifies 11 individually, organizationally, and externally induced barriers to value-based pricing. The study also sheds light on the potential sensegiving strategies for overcoming these barriers. |
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