Implementing strategic B2B pricing: Constructing value benchmarks

Implementing strategic B2B pricing: Constructing value benchmarks

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Article ID: iaor2012141
Volume: 11
Issue: 1
Start Page Number: 40
End Page Number: 53
Publication Date: Jan 2012
Journal: Journal of Revenue and Pricing Management
Authors: ,
Keywords: pricing, revenue management
Abstract:

Pricing specialists agree that businesses should price products based on value. Yet most companies set prices based on the cost of their product. Alternatively, they set prices based on the prices of competing products, without fully accounting for the worth of performance differences between their product and the reference products. They do not have the techniques or tools to appraise their product's value versus other products on the competitive landscape. We illustrate how to appraise a product's value based on the going rate prices of competing products and on its performance versus these comparable products on key purchase criteria that customers assess. We discuss how this benefits business teams by making them more market driven, customer focused and competitor savvy.

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