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

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17 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)33-53
JournalManagement Decision
Volume52
Issue number1
DOIs
Publication statusPublished - 2014

Keywords

  • resource-advantage theory
  • managerial practice
  • decision-making
  • competition
  • perceptions
  • perspective
  • strategies
  • framework
  • companies
  • quality

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