B2B Pricing: Negotiation, Calculation, Strategy

The course content is organized around three themes:

1) Price negotiation

• Understanding the strategy and tactics of professional buyers (includes guest lecture)
• Bargaining techniques*
• Integrative negotiation techniques
• Multi-party negotiation

2) Price calculation

• Price, quantity, costs*
• Price vs. payment terms vs. inventory
• Cost-plus price calculation and activity-based costing (includes case Sippican Corporation, HBS)
• Economic value calculation (includes case Atlantic Computer, HBS)

3) Price execution & price strategy

• Selling vs. pricing (includes case Boise Automation, Ivey)*
• Managing pricing excellence (includes guest lecture)
• Trade terms systems
• Service pricing
• Analytics: The Future of B2B Pricing?

(*) Three of the 15 sessions of the course (i.e., 20%, topics are indicated by *) have overlaps with my WHU BSc course “Foundations of Sales”. This is necessary to bring the diverse MSc group up to a common level.

1) In regard to factual knowledge, participants are enabled to

• apply sales jargon to discussing the status of a negotiation (such as BATNA, ZOPA, walk-away price, logrolling, good cop – bad cop, and other idioms),
• understand the specifics and terminology of pricing in various industry sectors (real estate, metals, wind energy, healthcare), and
• define pricing performance indicators.

2) In regard to conceptual knowledge, participants are enabled to

• analyze negotiation interests and positions,
• evaluate alternative price strategies in a given market context,
• interpret financial data, to analyze customer value,
• calculate price-trade-offs against other profit drivers,
• calculate activity-based costs of products and services, and
• analyze deal profitability,

3) In regard to pricing-specific procedural knowledge, participants are enabled to

• apply a structured negotiation process and blueprint,
• demonstrate financial value to the customer,
• evaluate price strategies in a commoditized market,
• create a negotiation strategy,
• deal with negotiation tactics and price objections, and
• provide constructive feedback on negotiation behavior of others.

4) In regard to general business-relevant procedural knowledge, participants are enabled to

• prepare for business meetings and internal committee sessions,
• make the best out of a limited preparation time budget,
• make concise contributions to meetings,
• constructively build and comment on contributions by other participants in the meeting,
• derive a course of action from a careful analysis of the situation and a structured evaluation of alternatives, and,
• generally, to negotiate anything.

5) In regard to metacognitive knowledge, participants are enabled to

• evaluate their own negotiation behavior and skills and
• create a skill profile for price managers.

The learning method mix includes role-play sessions between students with joint debriefings, case-based discussions with concluding mini-lectures, interactive concept lectures, and managerial guest presentations. This video shows the style of case-based sessions: https://www.youtube.com/watch?v=IbNNsq1fC0A. The problem-based way of learning requires a great amount of energy, both from the student and from the teacher.

• 30%: three class preparation notes (pdf, bullet points are enough, ca. 500-750 words)
• 10%: learning reflection note (pdf, bullet points are enough, ca. 500-750 words)
• 60%: 90-minute final exam (closed book). The final exam is a Moodle quiz with quantitative calculation questions and qualitative multiple-choice questions.