How Does Value-Based Pricing Influence the Perceived Price-Fairness in a Pay-Per-Use Environment?
- Typ:Master's thesis
What is the fairest way to price a product in the B2B context? This question is critical for sales representatives that strive to build long-term customer loyalty. In business relations, cost-based pricing can be seen as an industrial norm that is among the most widely used price reasonings and is furthermore perceived as fair. Regarding different offer types, a flat rate proposal often represents a customer's preferred choice, considering perceived price fairness. In this study, I dedicate myself to the usage of a more complex price reasoning, known as value-based pricing, which fairness impact has only been investigated sparely. Despite the literature stating cost-based pricing as the preferred choice among practitioners, I demonstrate the universal applicability of pricing products and technologies by their value instead of the costs incurred. In this study, I empirically demonstrate that neither cost- or value-based pricing combined with a flat rate or pay-per-use practice can be viewed as a significantly more reasonable choice. In the conducted experiment I examine different scenarios to review the perceived price fairness under such different circumstances. I find empirical evidence for a pay-per-use approach, appearing as offer type, to be the best possible choice when value-based pricing is applied. Moreover, the present paper aims to validate significant differences whether the supplier or the customer is responsible for occurring (financial) risks of any type. Leaving a purchaser with the possibility for maintenance and repair, the perceived confusion significantly increases while the perceived fairness significantly decreases. Implications of these findings for buying decisions and in favor of participants in the B2B surrounding, such as salesman and price managers, are discussed.