New industrial service pricing strategies and their antecedents: empirical evidence from two industrial sectors

Abstract

Purpose

The purpose of this paper is to investigate the conditions that led to the adoption of the three new industrial service‐pricing strategies, namely skimming pricing (i.e. a high initial price), penetration pricing (i.e. a low initial price), and pricing similar to competitive prices.

Design/methodology/approach

In order to achieve the study's research objectives, data were collected through a mail survey from 129 transportation and 48 information technology companies. Moreover, 20 in‐depth personal interviews were conducted in the initial phase of the research.

Findings

Analyzing data from two industrial sectors, the study concludes that skimming pricing and penetration pricing relate to the company's corporate and marketing strategy and the service characteristics, while market conditions influence the adoption of pricing similar to competitive prices.

Research limitations/implications

Given the limited number of the sectors investigated in the current study, the research results may not be easily applicable to other industrial service contexts.

Practical implications

The findings reflect the complexity and multidimensionality of new industrial service pricing. Thus, a single mode for pricing decisions does not seem to exist. Given the uncertainty facing industrial firms when making price decisions, especially with reference to new services, a balanced approach paying attention to both inward‐ and outward‐looking determinants can ensure the effective price determination.

Originality/value

The originality of the paper lies in the fact that it constitutes the first attempt to examine empirically the aforementioned conditions in an industrial service context.

Citation

Indounas, K. and Avlonitis, G. (2011), "New industrial service pricing strategies and their antecedents: empirical evidence from two industrial sectors", Journal of Business & Industrial Marketing, Vol. 26 No. 1, pp. 26-33. https://doi.org/10.1108/08858621111097184