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Topic: Student Questions

Value-based Pricing In B2b

Posted by wautersadriaan on 11/16/2014 at 11:24 AM ET 250 Points
Dear forum members,

I have to write a thesis about Vale-Based pricing in B2B companies, but I'm a bit stuck in my research for composing the 'research question', the main question which flows out of a problem. Can anyone give me any hints or any derivation or knows of any interesting substractions of value-based pricing which have not been researched yet?

Thanks in advance!

Kind regards
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  • Posted by mgoodman on 11/16/2014 at 12:00 PM Accepted
    Not sure I understand the question. Do you know what "value-based pricing" is?
  • Posted by wautersadriaan on 11/16/2014 at 12:38 PM Author
    Yes of course, let me phrase it differently: do you know about any aspects of value-based pricing which are very interesting for research/writing a thesis, interesting hypothesis, anything about value-based pricing where there isn't a lot of reseach about yet?
  • Posted by mgoodman on 11/16/2014 at 5:25 PM Moderator
    If you can find a specific company or industry, in a specific geographic location, where value-based pricing is the norm, that would be your best bet for research. When you have a topic as broad as "value-based pricing" you have to narrow the focus to something you can analyze, and "all B2B everywhere" is just too broad.

    How about something like commercial space travel as a supplier to NASA? That's pretty specific, and I suspect it is value-driven, since there isn't a lot of competition and there isn't a set price. Another area might be agricultural chemicals in the United States, where the value of products (in use) is often far more important than the actual cost of manufacture and distribution.
  • Posted by Mike Steffes on 11/16/2014 at 6:17 PM Accepted
    That's an interesting question right there- How does one find a specific company, or industry, in a specific geographic location, where value-based pricing is the norm? What drivers trigger value based pricing? What level of something, say, competition, forces a change away from it? How much positive or negative value can result from the policy, i.e.- monetary, brand image,market share, etc.?
    Origins, drivers, results, consequences...What interests you about it? What questions do you have about it that no one can definitively answer?
  • Posted by saul.dobney on 11/17/2014 at 3:54 AM Accepted
    You might turn it around and look at how professional purchasing departments respond to value-based pricing - issues of numbers of suppliers, uniqueness, risk etc. That would probably lead to a much richer (and possibly game-theory view) of B2B pricing including the whole strategy of a pricing approach across the lifetime of a contract.
  • Posted by mgoodman on 11/17/2014 at 6:57 AM Moderator
    In the United States, "concierge medicine" is an interesting market where value-based pricing is still the norm -- actually closely linked to the whole reason-for-being. (The alternative is price-controlled by the insurance industry.)

    https://en.wikipedia.org/wiki/Concierge_medicine

    That might be an interesting segment to study. Not sure it's really B2B though.

    Another example: Authors (and other creators of intellectual property) use value-based pricing when they set/negotiate terms and prices with publishers or other producers/distributors.
  • Posted by telemoxie on 11/17/2014 at 7:59 AM Accepted
    I agree that it makes sense to begin by selecting an industry and or technology to help you narrow your focus.

    How should you select an industry or technology? Let's think about your long-term goals. Other than graduation, what do you hope to gain from this exercise? If I were in your shoes, I would want to put effort into a program which would help me get a good job. I would try to identify a growing, profitable, complex industry. I would use the opportunity to learn about my target industry, and possibly more importantly, to develop contacts at key companies within the industry.

    Before graduation, you can reach out as a student researcher to ask opinions and gather information. After graduation, these same people would most likely welcome a visit by you to present your findings. These relationships could translate into interviews and possibly a career.
  • Posted by wautersadriaan on 11/24/2014 at 12:11 PM Author
    Sorry for the late response, I wanted to be able to give a specific answer in stead of a useless one. Thanks all for the useful information and input! I'm not from the US but from Belgium, so I cannot use the 'concierge medicine' for example. I have some options, but I don't know which one would be the most interesting and useful one:

    - In which industries is value-based pricing the norm?
    - In which industries is value-based pricing disadvantageous or impossible?
    - Which level of competition is necessary to cause a shift of value-based pricing?
    - Which risks can keep professional buying departments from buying a product based on value-based pricing?
    - How is value-based pricing being applied in very competitive markets?
    - How would companies shift from a value-based pricing to a cost-based pricing?
    - Which advantages do value-based pricing deliver selling companies in a high-tech sector like space industry or aircraft industry?
    - How can companies in the airline industry implement value-based pricing and concurr with low-cost manufacturers?
    - To which extent can a selling company implementing value-based pricing identify the willingness-to-pay of the customer
    - To which extent does innovation contribute to value-based pricing in high-tech industries?

    I could find more questions like this, but the problem is that I don't exactly know which direction to go... Thanks in advance for all the help!
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