ABSTRACT

Pricing is an important lever of profitability. There are three generic pricing strategies: cost-based pricing, market-based pricing, and value-based pricing (Hinterhuber and Liozu, 2012). Many companies are moving toward value-based pricing. The fundamental issue with pricing improvements and the deployment of value-based pricing is that companies often attempt to bring about such changes by tweaking current structures, processes, and organizations. This has proved to be a long and difficult road, as value-based pricing changes a company’s business model and risk management strategies. Adopting value-based pricing requires new capabilities, skills, tools, and management systems. This is an effort that should be led by top management (Liozu and Hinterhuber, 2013).