Abstract

Due to its direct impact on profitability, pricing disposes of success or failure in every company (e.g., Gruber, 2004). In particular, pricing of new products and services has become increasingly important (Henard & Szymanski, 2001). Still, entrepreneurial managers often undervalue the great relevance of this topic since their ventures are limited in size and their focus lies on the products and services themselves (Gruber, 2003; Hills, Hultman & Miles, 2008). In addition, academic research in this area is not effective, especially regarding coverage of new ventures, methodologies, and impact on managers.

This study of new ventures’ pricing of new products and services makes three major contributions to entrepreneurship research. First, we analyze the characteristics of pricing actually applied by entrepreneurs. Second, we identify fifteen major determinants of the pricing practices, that is, value-, competition-, and cost-informed pricing. Third, we show the effects on venture performance. In answering these questions, we build on three related theoretical perspectives: Resource-Dependence Theory, Information Economics, and Principal–Agent Theory.

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