Price decisions, values, and cost management: : A pragmatic constructivist approach

Abstract

This paper suggests the paradigm of pragmatic constructivism as a novel and fruitful way for researchers to explore pricing approaches in practice. To do so, the paper leverages pragmatic constructivism’s concept of reality integration to discuss four classical pricing approaches. These approaches are: i) the economist approach; ii) the cost-plus pricing approach; iii) the competition-based pricing approach; and iv) the customer-based pricing approach. Our findings suggest that pricing literature within the fields of economics, marketing and strategy often is not able to to sufficiently take the complex reality of practice into account. Specifically, we argue that the literature takes too reductionistic approaches to the pricing phenomenon. This paper agrees with the marketing- and strategy-based pricing literature’s critique of the assumptions of the neoclassical theory of the firm. However, in contrast to this literature, we argue that the cost-plus and competition-based pricing approaches are still highly relevant. Based on our findings, we suggest that the practice-paradigm of pragmatic constructivism may be a fruitful departure point for future research to develop a richer and broader understanding of pricing in practice that potentially could lead to more advanced pricing conceptualisations.    &nbsp