Organizational and institutional barriers to value-based pricing in industrial relationships

Majid Smaeilpour¹ Somayeh Ahmadi²

1) assistant professorof business Administration
2) master student of business admininstration

IOI Code : XYCF-ADHED
Publication : 2nd.International Congress on Management, Economy, Humanities and Business Development(icmba.ir)
Abstract :
    In their effort to differentiate themselves from cost-driven rivals, many industrial companies are beginning to serve their customers through value-based offerings. Such companies often engage actively in collaborative value creation with their customers. To capture a fair share of the value created, they need to adopt a value based pricing approach. Therefore, value-driven competition necessitates value-based pricing (VBP). The present study explores the barriers to exercising value-based pricing and suggests ways to overcome those obstacles in putting value-based pricing into action in B2B sales. The purpose of the present study is to explore the barriers to exercising VBP in industrial buyer–supplier relationships, and suggest ways by which sellers can potentially overcome the barriers to adopting VBP for improved value capture. Our study identified three institutional barriers to value-based pricing: understanding and influencing the customers desired value, quantifying and communicating value in buyer–seller relationships, and challenges in capturing a share of the value created in industrial exchange. Moreover, our analysis shows that overcoming each of these barriers is a multi-faceted issue accompanied by several challenges.

Keywords : customers desired value value based pricing industrial exchange