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Value first, then price: the new paradigm of B2B buying and selling

Author

Listed:
  • Andreas Hinterhuber

    (Ca’ Foscari University of Venice)

  • Todd C. Snelgrove

    (Experts in Value)

  • Bo-Inge Stensson

    (Stensson & Associates AB)

Abstract

Most companies today take an inherently adversarial approach to buying and selling in industrial markets, thereby missing out on opportunities for joint value creation with customers and suppliers. Sales as well as procurement are too obsessed with price and not enough with value. In this paper we present a set of principles that put joint value creation at the centre of the relationship with customers and suppliers. With respect to customers, the value quantification capability is the most important competency of the sales function, i.e. the ability to translate a firm’s competitive advantages into one quantified, monetary value reflecting both qualitative as well as quantitative customer benefits. With respect to suppliers, we call for the creation of new metrics, such as total value of ownership, reflecting innovation, management capabilities, sustainability, and other elements beyond quality, price, and delivery. With value quantification capabilities (sales) and total value of ownership models (procurement) the key element of relationship with both customers and suppliers is value first, then price.

Suggested Citation

  • Andreas Hinterhuber & Todd C. Snelgrove & Bo-Inge Stensson, 2021. "Value first, then price: the new paradigm of B2B buying and selling," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(4), pages 403-409, August.
    • Handle: RePEc:pal:jorapm:v:20:y:2021:i:4:d:10.1057_s41272-021-00304-3
    DOI: 10.1057/s41272-021-00304-3
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    References listed on IDEAS

    as
    1. Hinterhuber, Andreas, 2017. "Value quantification capabilities in industrial markets," Journal of Business Research, Elsevier, vol. 76(C), pages 163-178.
    2. Hinterhuber, Andreas, 2016. "The six pricing myths that kill profits," Business Horizons, Elsevier, vol. 59(1), pages 71-83.
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    Cited by:

    1. John V. Colias & Stella Park & Elizabeth Horn, 2023. "Optimizing B2B Product Offers with Machine Learning, Mixed Logit, and Nonlinear Programming," Papers 2308.07830, arXiv.org.
    2. Wallusch Jacek, 2023. "Pricing and data science: The tale of two accidentally parallel transitions," Economics and Business Review, Sciendo, vol. 9(2), pages 115-132, April.
    3. Wetzels, Ruud W.H. & Klaus, Philipp “Phil†& Wetzels, Martin, 2023. "There is a secret to success: Linking customer experience management practices to profitability," Journal of Retailing and Consumer Services, Elsevier, vol. 73(C).
    4. John V. Colias & Stella Park & Elizabeth Horn, 2021. "Optimizing B2B product offers with machine learning, mixed logit, and nonlinear programming," Journal of Marketing Analytics, Palgrave Macmillan, vol. 9(3), pages 157-172, September.

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