Dynamic Pricing Model Factors: Configure-to-Order Product and Business-to-Business Sales Perspective

Abstract

Purpose: Dynamic pricing is a pricing strategy in which product prices are dynamically adjusted based on factors relevant to the pricing model. This study aims to fill a research gap in understanding the dynamic pricing of Configure-to-Order (CTO) products in the business-to-business (B2B) sales context. The primary objective is to understand the dynamic pricing model factors that influence the pricing of CTO products.

Study design/methodology/approach: This study involved a qualitative exploration of mechanical industry product pricing through an extensive literature review and thematic analysis of rich data mainly obtained through semi-structured interviews.

Findings: The findings suggest that the widely discussed pricing model challenges significantly affect configure-to-order (CTO) pricing models. CTO-specific challenges stem from product complexity, high customization, and unique configurations, which make pricing more intricate. This study clarifies the dynamic pricing model factors relevant to the business-to-business CTO product context in the mechanical industry, and highlights how configurability shapes these factors. This unique aspect of CTO products introduces additional dimensions to pricing considerations, which require tailored approaches for effective implementation.

Originality/value: The original contribution is provided by identifying the dynamic pricing model factors for business-to-business configure-to-order products in the mechanical industry context.