On cost-informed pricing and customer value: a resource-advantage perspective on industrial innovation pricing practices

Paul Ingenbleek, Marion Debruyne and Ruud T. Frambach
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Paul Ingenbleek: Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics

No 38, Serie Research Memoranda from VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics

Abstract: By empirically testing a framework of pricing strategies and their determinants in an industrial setting, Noble and Gruca (1999a) help to overcome the lack of empirical validation of pricing theory. In a commentary to the article, Cressman (1999) (1) expresses worries about the high percentage of firms that engages in cost-based pricing; (2) raises a definition question on value-based pricing; and (3) stresses that empirical pricing literature does not provide ideas on successful pricing practices in relation to customer value created. The aim of this study is to respond to calls for research on successful pricing practices. A perspective from resource-advantage theory (Hunt and Morgan 1995) is used to formulate expectations on the degree to which the use of information on customer value, competition, and costs contributes to the success of a price decision. It is argued that the success of these practices is contingent on the relative customer value the firm has created and the degree to which this position of relative value is sustainable in the competitive market place.These expectations are empirically tested on pricing decisions with respect to the introduction of new industrial capital goods. It is concluded that Noble and Gruca’s (1999a) findings on cost-based pricing can be complemented, since our results show that under most circumstances cost-informed

JEL-codes: D40 M31 O31 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (1)

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