In B2B, a sustainable price rarely comes from applying a uniform percentage to cost.
In B2B, a sustainable price rarely comes from applying a uniform percentage to cost. It depends on the customer's credible alternative, differentiated economic value, implementation risk, contractual terms and the share of value each party retains. A usable corridor separates an economic floor, competitive reference, value ceiling and negotiated price. Document each component with its source, owner and sensitivity.
Decision and method.
Offer a price in an explicit corridor that protects supplier contribution while leaving demonstrable customer surplus after switching costs and risks. Cost the alternative over the same duration, scope and service level, including hidden costs, risks and internal resources. Quantify differentiated productivity, availability, quality, time, compliance and revenue gains with realisation probability and contract horizon. Set the floor from delivery cost and risk, the competitive reference from the alternative and the ceiling from total economic value. Trade price, volume, term, warranty, indexation and risk sharing together: every concession needs a measurable counterpart.
Worked example.
The alternative costs €32,000. The solution saves 1,200 hours at €42, avoids €18,000 of downtime and requires €12,000 of change; supplier cost is €18,000. Net differentiated value: 1,200 × 42 + 18,000 − 12,000 = €56,400. Economic value ceiling: 32,000 + 56,400 = €88,400. At €58,000, supplier contribution is €40,000 and customer surplus €30,400. The price is defensible only if avoided hours and downtime are validated; a measurement clause can share value under uncertainty.
Checks and limits.
Compare alternative and solution over the same contractual horizon; each gain has a source, probability and customer owner; price stays above floor after risk and delivery cost; every commercial concession receives duration, volume or risk consideration. Economic value does not fully represent political willingness to pay. Gains can depend on client adoption and processes. Recalculate the corridor when scope, risk or alternative changes.
Resources and sources.
Download the B2B value-pricing model. Related: build the B2B mix, compare value methods, structure the price corridor. Sources: Anderson, Narus and van Rossum (2006); Hinterhuber (2004); Nagle, Hogan and Zale (2016).