IDEAS home Printed from https://ideas.repec.org/a/prg/jnlcbr/v2021y2021i4id267p99-123.html
   My bibliography  Save this article

The Value-Based Pricing Determination Matrix for Pricing Method Selection

Author

Listed:
  • Florian Steinbrenner
  • Jana Turčínková

Abstract

Several researchers suggest that value-based pricing (VBP) is one of the most profitable pricing methods for companies competing in today's business environment. Interestingly, the implementation rates of VBP are, however, rather low. Numerous barriers to the implementation of value-based pricing have been found by researchers already. Although, a theoretical model for determining whether value-based pricing may be a suitable pricing method for a business is yet to be found in the literature. This study aims to introduce a theoretical model to aid pricing executives in their pricing method selection. For this purpose, 20 semi-structured in-depth expert interviews with German pricing experts were conducted as part of qualitative data analysis. The experts were selected using a purposive selection method. Pricing experts were asked to describe the most important factors for determining whether a company may implement value-based pricing. We identified two main factors as being necessities for using VBP. The first factor named by the authors was the brand advantage (BA), and the second factor was represented by the delivered product benefits (DB) as perceived by the customer. Based on these two factors, a two-dimensional, quadrant-based theoretical model was developed and was named the VBP Determination Matrix. The matrix now evaluates a company's position within the matrix based on the factors BA and DB. It leads to direct calls-to-action for properly choosing the most suitable pricing method. This study's theoretical contribution was the development of a so far non-existing two-dimensional model for the determination of the suitability of value-based pricing. Business practitioners are now provided with an easy-to-use and highly applicable model to determine the initial suitability of implementing VBP. Senior management is given direct calls-to-action, whether an investment to implement VBP shall be made and whether to allocate resources. Implications for Central European audience: The VBP Determination Matrix is a highly applicable model recommended especially for business practitioners in pricing, marketing and management. Central European companies are recommended to utilise the model to benefit from its strategic recommendations to properly select the most suitable pricing method for profit maximisation and competitiveness optimisation.

Suggested Citation

  • Florian Steinbrenner & Jana Turčínková, 2021. "The Value-Based Pricing Determination Matrix for Pricing Method Selection," Central European Business Review, Prague University of Economics and Business, vol. 2021(4), pages 99-123.
    • Handle: RePEc:prg:jnlcbr:v:2021:y:2021:i:4:id:267:p:99-123
    DOI: 10.18267/j.cebr.267
    as

    Download full text from publisher

    File URL: http://cebr.vse.cz/doi/10.18267/j.cebr.267.html
    Download Restriction: free of charge
    File URL: http://cebr.vse.cz/doi/10.18267/j.cebr.267.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.18267/j.cebr.267?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ecobici Mihaela Loredana, 2017. "The Use Of Ansoff Matrix In The Field Of Business," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 2, pages 141-149, December.
    2. Stephan M. Liozu, 2017. "State of value-based-pricing survey: Perceptions, challenges, and impact," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(1), pages 18-29, February.
    3. Subhani, Muhammad Imtiaz & Osman, Ms.Amber, 2009. "A Study On The Association Between Brand Awareness And Consumer/Brand Loyalty For The Packaged Milk Industry In Pakistan," MPRA Paper 21367, University Library of Munich, Germany, revised 12 Sep 2009.
    4. Forbis, John L. & Mehta, Nitin T., 1981. "Value-based strategies for industrial products," Business Horizons, Elsevier, vol. 24(3), pages 32-42.
    5. Chenavaz, Régis & Paraschiv, Corina, 2018. "Dynamic pricing for inventories with reference price effects," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-16.
    6. Michael Neubert, 2017. "International Pricing Strategies for Born-Global Firms," Central European Business Review, Prague University of Economics and Business, vol. 2017(3), pages 41-50.
    7. Töytäri, Pekka & Keränen, Joona & Rajala, Risto, 2017. "Barriers to implementing value-based pricing in industrial markets: A micro-foundations perspective," Journal of Business Research, Elsevier, vol. 76(C), pages 237-246.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Boccali, Filippo & Mariani, Marcello M. & Visani, Franco & Mora-Cruz, Alexandra, 2022. "Innovative value-based price assessment in data-rich environments: Leveraging online review analytics through Data Envelopment Analysis to empower managers and entrepreneurs," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    2. Florian Steinbrenner & Jana Turčínková, 2021. "Industry-Specific Factors Impeding the Implementation of Value-Based Pricing," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 7(1), pages 27-46.
    3. Hinterhuber, Andreas & Kienzler, Mario & Liozu, Stephan, 2021. "New product pricing in business markets: The role of psychological traits," Journal of Business Research, Elsevier, vol. 133(C), pages 231-241.
    4. Christen, Tatjana & Hess, Manuel & Grichnik, Dietmar & Wincent, Joakim, 2022. "Value-based pricing in digital platforms: A machine learning approach to signaling beyond core product attributes in cross-platform settings," Journal of Business Research, Elsevier, vol. 152(C), pages 82-92.
    5. Andreas Hinterhuber, 2017. "The strategy and tactics of pricing: A guide to growing more profitably (6e)," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(6), pages 640-643, December.
    6. Stephan M. Liozu, 2021. "The adoption of pricing from an organizational perspective and its impact on relative firm performance," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(4), pages 390-402, August.
    7. Stephan M. Liozu, 2017. "State of value-based-pricing survey: Perceptions, challenges, and impact," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 16(1), pages 18-29, February.
    8. Subhani, Muhammad Imtiaz & Hasan, Syed Akif & Osman, Ms. Amber, 2012. "Do consumers buy bread and diamond with the same attachment?," MPRA Paper 45094, University Library of Munich, Germany.
    9. Liozu, Stephan M., 2019. "Make pricing power a strategic priority for your business," Business Horizons, Elsevier, vol. 62(1), pages 117-128.
    10. Anton, Ramona & Chenavaz, Régis Y. & Paraschiv, Corina, 2023. "Dynamic pricing, reference price, and price-quality relationship," Journal of Economic Dynamics and Control, Elsevier, vol. 146(C).
    11. Lucie Kaňovská & Veronika Bumberová, 2021. "The Differences in the Propensity of Providing Smart Services by SMEs from the Electrical Engineering Industry with Regard to Their Cooperation and Innovation Flexibility," Sustainability, MDPI, vol. 13(9), pages 1-23, April.
    12. Hasan, Syed Akif & Subhani, Muhammad Imtiaz & Osman, Ms. Amber, 2012. "The crux of green marketing: an empirical effusive study," MPRA Paper 35688, University Library of Munich, Germany.
    13. Bertrand Crettez & Naila Hayek & Georges Zaccour, 2020. "Existence and characterization of optimal dynamic pricing strategies with reference-price effects," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 28(2), pages 441-459, June.
    14. Singh Dara Singh Karpal & Islam Md. Aminul, 2017. "Validating an instrument for measuring brand equity of CSR driven organizations in Malaysia," Management & Marketing, Sciendo, vol. 12(2), pages 237-251, June.
    15. Ronald B. Larson, 2019. "Promoting demand-based pricing," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(1), pages 42-51, February.
    16. Hasan, Syed Akif & Subhani, Muhammad Imtiaz & Osman, Ms. Amber, 2012. "Consumers’ versatile buying behavior irrespective to high and low involvement products," MPRA Paper 37665, University Library of Munich, Germany.
    17. Peter M. Noble & Thomas S. Gruca, 1999. "Industrial Pricing: Theory and Managerial Practice," Marketing Science, INFORMS, vol. 18(3), pages 435-454.
    18. Liozu, Stephan & Hinterhuber, Andreas, 2022. "Pricing as a driver of profitable growth: An agenda for CEOs and senior executives," Business Horizons, Elsevier, vol. 65(4), pages 457-467.
    19. Raja, Jawwad Z. & Frandsen, Thomas & Kowalkowski, Christian & Jarmatz, Martin, 2020. "Learning to discover value: Value-based pricing and selling capabilities for services and solutions," Journal of Business Research, Elsevier, vol. 114(C), pages 142-159.
    20. Hasan, Syed Akif & Subhani, Muhammad Imtiaz & Osman, Ms. Amber, 2012. "Do economic players shape up fashion trends?," MPRA Paper 37660, University Library of Munich, Germany.

    More about this item

    Keywords

    implementation; model; price-setting; strategy; value-based pricing;
    All these keywords.

    JEL classification:

    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlcbr:v:2021:y:2021:i:4:id:267:p:99-123. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.