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Examines the advantages and disadvantages of six service pricing approaches in the service literature including: traditional cost‐oriented approach; traditional competitive‐oriented approach; extended cost‐oriented approach; differentiation premium approach; client‐driven approach; and bundle pricing approach. Proposes a multi‐step synthetic pricing approach and a framework to deal with the complexity of service pricing. Compared with other pricing approaches, the multi‐step synthetic service pricing approach has the advantages of considering simultaneously the crucial aspects of service pricing: market competitiveness; internal cost‐profit structure; bundling and unbundling service pricing; service characteristics premium; price standard limits; client‐oriented price/demand sensitivity; and client‐oriented profit maximization. Provides an example to demonstrate the managerial application of the proposed approach.

Demand-based pricing fixes price according to customers’ perceptions of service value and to their resulting willingness to pay. This pricing approach enables service companies to align their prices to customers’ preferences and to their expenditure propensity. Accordingly, it can generate higher margins than other pricing approaches. Nevertheless, this approach is difficult to implement operationally. Consequently, in order to overcome these implementation difficulties, the purpose of this paper is to provide a demand-based pricing approach based on the user-friendly technique of service blueprint (SB).

The methodology relies on the design science leads. Design science deals with creating artefacts or models for supporting human or organizational purposes; such artefacts have to be assessed against criteria of utility or value for users. Accordingly, an experimental action research is performed for both implementing and testing the proposed pricing approach.

Starting from the main difficulties hindering implementation of demand-based pricing, SB is proved to enable companies to overcome such difficulties and to support its implementation. Moreover, by employing SB, an innovative approach for fixing service prices is provided.

The proposed approach enables managers of service companies to overcome difficulties of demand-based pricing and to employ pricing strategies according to demand-based drivers.

In line with a recent call for research on service pricing, this paper develops a new pricing approach, which is able to promote demand-based pricing.

Empirical studies have found that cost-based pricing remains dominant in pricing practice and suggest that practice conflicts with marketing theory, which recommends value-based prices. However, empirical studies have yet to examine whether cost-plus formulas represent the pricing approach or essence.

This study aims to address the factors that explain price setting whereby the cost-plus formula is not just the pricing approach but also the pricing essence. This examination is grounded in a survey conducted on 380 Brazilian industrial companies.

The results show that, for price-makers, the cost-based pricing essence is positively associated with four factors (two obstacles to deploying value-based pricing, company size and differentiation), but it is negatively related to one factor (premium pricing strategy). For price-takers, the cost-based pricing essence is positively associated with four factors (two obstacles to deploying value-based pricing, coercive isomorphism and use of full costs), but it is negatively related to five factors (one obstacle to deploying value-based pricing, company size, competitors’ ability to copy, normative isomorphism and experience).

The key contribution of this paper is demonstrating that cost-plus formulas do not go against the incorporation of competitors and value information. This study reveals that it is possible to set prices based on either value or competitors’ prices while simultaneously preserving the simplicity of the cost-plus formulas. Via the margin, firms may connect costs to information about competition and value. The authors also demonstrate the drawbacks of not segregating companies into price-makers and price-takers and an excessive focus on the pricing approach at the expense of pricing essence.

The purpose of this general review paper is to provide a comparison and evaluation of the treatment of pricing by the disciplines of economics and marketing.

It is from three perspectives that the marketing and economics approaches to pricing are reviewed, namely, buyers' response to price, firm's determination of price, and industry‐ or economy‐wide role of price.

A comparative review of the relevant marketing and economics literature shows that there are important differences between the two disciplines in their treatment of pricing. Marketing demonstrates a richer and more empirically based treatment of the pricing issue from the buyer's perspective, while economics is unchallenged from the economy‐wide perspective. The differences found between the marketing and economics approaches to pricing are mostly due to their different historical origins, primary concerns and doctrinal evolution. In contrast, interdisciplinary loans especially from behavioral science have made possible considerable advances in marketing, particularly in the understanding of the buyer's perspective.

Previous reviews of the pricing literature do not attempt to provide a direct comparison and evaluation and offer no explanation for the observed differences among the economics and the marketing disciplines regarding their treatment of the pricing issue. The value and originality of the current paper lies in the fact that it represents the first attempt to provide such a comparison and evaluation.

Research on business-to-business (B2B) pricing has been mainly focussed on the supplier’s pricing process, thus adopting traditionally an internal perspective and perceiving pricing as a profit distribution parameter rather than an opportunity for collaboration with customers. Recently, the opportunity to develop win-win, collaborative relationships in the B2B pricing process by embracing a supply chain perspective has started to attract the attention of scholars across several research streams, who have highlighted the emergence of this topic using different definitions, perspectives and methodologies. The purpose of this paper is to address the need for integrating the fragmented body of knowledge on B2B pricing toward supply chain collaboration.

This critical literature review adopts an interdisciplinary approach, focussing on industrial marketing and operations and supply chain management areas.

The authors provide a critical synthesis and discussion structured in four streams clustered around two dimensions, i.e. the “extension” of the collaboration in the pricing process along the supply chain and the “direction” of collaboration.

Drawing on the literature gaps, the paper concludes by proposing an agenda for future research for a relevant topic both for academics and practitioners.

This paper offers a novel comprehensive view of the supply chain collaboration in the B2B pricing process and provides opportunities for intensifying dialogue across different research areas.

Customer value‐based pricing is increasingly recognised by academics and practitioners as the most effective approach to pricing for companies wishing to achieve increased profitability and sustained success. However, despite this apparent support for the implementation of value‐based pricing, the practical reality is that more than 80 percent of companies continue to price their products and services primarily on the basis of costs and/or competitive price levels. The present study investigates this phenomenon and identifies the main reasons for this gap between aspiration and reality.

A two‐stage empirical approach is employed: first, in a qualitative research, the phenomenon of implementation of value‐based strategies with groups of business executives participating in pricing workshops is explored. The result of this qualitative stage was then used to develop a questionnaire which was tested upon a significantly larger and more stratified population. Finally cluster analysis to summarize the results of this quantitative research stage was employed.

Based on a survey of 81 executives representing a wide range of B2B and B2C industries in Germany, Austria, China, and the USA, five main obstacles to the implementation of value‐based pricing strategies have been identified: deficits in value assessment; deficits in value communication; lack of effective market segmentation; deficits in sales force management; and lack of support from senior management. The paper also provides a range of remedies to overcome these obstacles.

In extant literature there exists a gap between: the widespread understanding of the superiority of customer value‐based pricing strategies; and the circumstance that customer value‐based pricing strategies are currently the least widely diffused major pricing approach. We cover thus gap by highlighting which obstacles exist to the implementation of value‐based pricing strategies and provide a series of remedies to overcome these obstacles.

This paper aims to present an extension of price sensitive measurement (PSM) combined with activity-based costing (ABC) for supporting activity-based pricing approaches in the small and medium-sized restaurants.

The joint model of PSM and ABC is applied to the fixed menu pricing analysis of a typical medium-small Italian restaurant.

The outcomes confirm the potential of the activity-based pricing approach for supporting pricing decision-making in the small and medium-sized restaurants. However, the complexity of the model for these contexts suggests testing simplified versions of ABC, proposed for other sectors, to exploit integration with PSM. Further, the authors find evidence of the need to further investigate the role of informal conditions, characterizing small-medium enterprises, which may play for the successful implementation of the approach proposed.

There is no analysis using the suggested approach for supporting menu pricing in medium-small restaurants. This case study contributes to the literature on activity-based pricing for small and medium-sized restaurants, based on the ABC approaches.

To achieve a full understanding of the role of marketing from plan to profit requires a knowledge of the basic building blocks. This textbook introduces the key concepts in the art or science of marketing to practising managers. Understanding your customers and consumers, the 4 Ps (Product, Place, Price and Promotion) provides the basic tools for effective marketing. Deploying your resources and informing your managerial decision making is dealt with in Unit VII introducing marketing intelligence, competition, budgeting and organisational issues. The logical conclusion of this effort is achieving sales and the particular techniques involved are explored in the final section.

While the gap between economic theory and companies’ practice, regarding to the pricing setting, has been extensively explored and explained, the new gap between the marketing normative view and companies’ practice needs further clarification. In this way, the paper aims to investigate whether marketing researchers’ claim that the use of cost-based price approach prevails over the use of value-based price approach is pertinent.

The paper is guided by the following research question: “Does price-setting based on cost plus margin go against the value-based price approach?” The answer to this question is grounded in reflections on results of previous research studies and in a case study conducted in an industrial company. Because of the qualitative focus of the present study, hypotheses are not established, but rather the following proposition: certain companies use the mechanics of cost plus margin in the sale price-setting process, but it does not necessarily mean that these companies set prices based on cost.

The arguments, propositions and the case study findings provide the logical sequence and the support required to conclude that price-setting based on cost plus margin does not always conflict with the value-based price approach. As a result, it may be claimed that the general proposition established is theoretically valid, i.e. using a price formula that contains the elements cost and margin does not necessarily mean that the company sets prices based on cost.

The key contribution of this paper is demonstrating that in certain business environments, such as, B2B, using the price formation mechanics based on cost plus margin is the way found by companies to enable the approach adopted. The approach may be cost-based or value-based price. This is the first study that explicitly reveals how B2B companies may set prices based on value while simultaneously preserving the simplicity of cost plus margin formulas. Researchers have significant misconceptions about these formulas: in previous studies, they classified all price-making companies as those adopting the cost-based price approach simply because they used formulas containing the element cost.

How do pricing methods affect firm performance? From both an academic as well as a managerial perspective this question is important. The literature is silent on the relationship between pricing approach and company performance. The aim of this paper is to address this research gap.

To address this practical and theoretical deficit, the authors surveyed 1,812 professionals involved in pricing to measure the influence of pricing approach on firm performance.

The authors find a positive relationship between value‐based pricing (but not competition‐based pricing) and firm performance. Furthermore, the authors find that the three pricing orientations differently influence firm pricing capabilities, which in turn are positively related to firm performance. This paper is thus the first paper documenting a positive relationship between value‐based pricing and firm performance through a quantitative research design.

These findings have important theoretical as well as practical implications and suggest that all firms, regardless of size, industry or geography, benefit from value‐based pricing.