State of value-based-pricing survey: Perceptions, challenges, and impact

While value-based pricing remains the most talked about and taught pricing orientation, it is also the most difficult pricing orientation to deploy in organizations. For the past 5 years, scholars have continued to recommend the adoption of value-based pricing while at the same time exploring the re...

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Bibliographic Details
Published in:Journal of revenue and pricing management 2017-02, Vol.16 (1), p.18-29
Main Author: Liozu, Stephan M.
Format: Article
Language:English
Subjects:
Business and Management
Competition
Contingent fees
Design
Marketing
Original Article
Perceptions
Polls & surveys
Pricing policies
Professional ethics
Professionals
Response rates
Studies
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Summary:While value-based pricing remains the most talked about and taught pricing orientation, it is also the most difficult pricing orientation to deploy in organizations. For the past 5 years, scholars have continued to recommend the adoption of value-based pricing while at the same time exploring the reasons for its continued low adoption and high rate of failure. We surveyed 144 pricing professionals in 144 distinct organizations to understand the current state of the value-based-pricing practice. We explore perceptions and challenges, and further validate the impact of value-based pricing on margins. We also identify the key drivers of the impact of value-based pricing on the business unit profitability and pricing power. Our results show that we still have a long road ahead with the increased adoption of value-based pricing as a primary pricing orientation. While perceptions have improved, there remain critical difficulties in deploying this methodology in firms. With this study, we intended to continue the discussion on the necessity to pay attention to customer value and also provide additional knowledge to practitioners willing to get started on the journey toward pricing excellence.
ISSN:1476-6930
1477-657X
DOI:10.1057/s41272-016-0059-8