A key challenge for many businesses in China is the fierce price competition which – many businesses conclude – makes double-digit margins in Chinese business-to-business markets impossible.

Our view is that the fundamentals of pricing remain the same in China elsewhere – not least, it is necessary to understand the market and communicate value to the target audience in order to charge market-leading prices.

Understanding Price Against Value

The fundamentals of value revolve around the trade-off between the benefits a customer receives from a product or service and the price they will pay for it. Although there is often an assumption among foreign businesses that customers in China buy predominantly on price, our experience indicates that Chinese customers are increasingly driven on value buoyed by the disparity between benefits a product/service offers and the price that is charged.

Pricing market research can help to verify pricing assumptions as well as answer the questions of where price/product trade-offs may lie, in addition to where extra value can be delivered. In China, pricing research needs to take numerous factors into consideration such as quickly emerging trends in the market that may alter perceptions, product inertia or even the unique history of the marketplace.

Our techniques are designed to understand the trade-offs that Chinese customers make when selecting and acquiring products and services by using different price-sensitivity models and value maps.