Content area
Full Text
Abstract
Purpose - The purpose of this research paper is to explore the pricing objectives that service companies pursue along with the pricing methods that they adopt in order to set their prices.
Design/methodology/approach - An extensive review of the literature revealed the complete lack of any previous work aiming to investigate the potential association between these two important elements of a company's pricing strategy. Thus, the value of the paper lies in the fact that it presents the first attempt to examine this issue empirically. In order to achieve the research objectives, data were collected from 170 companies operating in six different services sectors in Greece through personal interviews.
Findings - The findings of the study reveal that the objectives, which are pursued, are fundamentally qualitative rather than quantitative in their nature with a particular emphasis given on the companies' customers. However, the pricing methods, which are adopted by the majority of the companies, refer to the traditional cost-plus method and the pricing according to the market's average prices. The study also revealed that the pricing objectives are, as should be expected, associated with the pricing methods.
Practical implications - The practical implications of the findings refer to the fact that managers might gain a lot by placing their emphasis on an integrated pricing approach and implement pricing methods that are in line with the pricing objectives that have been initially set. However, the context of the study (Greece) is an obvious limitation to the ability to generalize these findings, suggesting the need for future research that replicates the current study in other countries.
Originality/value - Managers might gain a lot by placing their emphasis on an integrated pricing approach and implement pricing methods that are in line with the pricing objectives that have been initially set.
Keywords Service industries, Pricing policy, Greece
Paper type Research paper
An executive summary for managers and executive readers can be found at the end of this article.
Introduction
A number of different authors have underlined the importance of pricing decisions for every company's profitability and long-term survival. For instance, Nagle and Holden (1995, p. 1) point out:
[...] if effective product development, promotion and distribution sow the seeds of business success, effective pricing is the harvest....