The theoretical foundations of value-informed pricing in the service-dominant logic of marketing

Abstract

Purpose

In the mainstream normative pricing literature, value assessment is virtually non-existent. Although the resource-based literature recognizes that pricing is a competence, value-informed pricing practices are still weakly grounded in theory. The purpose of this paper is to strengthen the theoretical grounds of such pricing practices.

Design/methodology/approach

The paper applies the emerging service-dominant logic of marketing to pricing. More specifically, it apples the ten foundational premises of service-dominant logic to pricing and it places pricing in the frameworks of one of the major building blocks of service-dominant logic, namely the resource-advantage theory of competition.

Findings

From a service-dominant perspective, price is the reward for the application of specialized knowledge and skills. Pricing is an operant resource, or competence, that assesses customer value, applies it in multi-dimensional price propositions, and implements it in processes of co-creating prices with customers. Value-informed pricing is the central pricing practice within such competences.

Practical implications

Prices vary among others between “good” and “bad”, firms generate competitive advantage not only through value creation, but also through pricing. Learning is key to develop pricing competences.

Originality/value

This paper is the first to ground value-informed pricing at high levels of abstraction in general marketing theory.

Citation

T.M. Ingenbleek, P. (2014), "The theoretical foundations of value-informed pricing in the service-dominant logic of marketing", Management Decision, Vol. 52 No. 1, pp. 33-53. https://doi.org/10.1108/MD-03-2013-0128