Publishable summary: Although price setting is a key task in most business transactions, in the domain of industrial symbiosis little has been written on the subject. Moreover, there is evidence that some technically feasible IS exchanges never materialize because they are not profitable or not the most profitable alternative. Therefore, the subject of this deliverable is to provide recommendations on pricing mechanisms to Coralis lighthouses and followers based on the documentation and analysis of over 70 other successful IS exchanges. Interviews are used to collect data, and theory from B2B pricing literature is used to analyse it.
More specifically, ten example cases of successful IS price mechanisms are presented and analysed in detail as per the request of Coralis partners. Additionally, based on the whole body of collected cases, recommendations on IS pricing mechanisms and good practices during the price negation process are provided. The recommendations are 34 in total and are linked to 13 specific characteristics that an IS case might have. The good practices during price negotiation include fairness, transparency, honesty, trying to understand others and be understood as well as creativity. Finally, a framework for assessing the business value of IS, including implications to costs, earnings, risk, opportunities, stakeholder relationships and innovation capabilities is also provided. This framework allows practitioners to enter the pricing process with a comprehensive understanding of where they derive value from and where they do not.
One key finding of the study is that in practice, a wide variety of pricing mechanisms are used. Pricing mechanisms are, and need to be, tailored to the characteristics of the IS exchange. However, in many cases combinations of market or competition-based pricing and cost-based pricing are used, whereas value-based pricing is less common. There is a potential to strengthen the value-based pricing elements in IS by using the framework for assessing the business value of IS. Several other commonalities of IS price mechanisms were identified, for example, the price of the next best alternative is used as a price floor or ceiling, the user’s sales price is used to calculate the price of the residual, price tiers based on quality and quantity are used to motivate or penalize the supplier etc. There is also an important time perspective connected to pricing in the IS context, i.e., if an IS exchange was not profitable yesterday it does not mean that it is not profitable today and vice versa. Moreover, many companies reported that they became more cost-efficient over time.
These four main outcomes i.e., the examples, the framework for assessing the business value of IS, the pricing recommendations and the good practices can be used by companies that have established technical feasibility and are exploring financial feasibility or entering price negotiations. Thus, the outcomes are relevant to both Coralis partners1 and non-Coralis companies, as well as facilitators on the local, regional, and national levels seeking to know more about the pricing process, which usually takes place behind closed doors. Finally, due to the scarcity of academic publications on these issues, researchers can also benefit from the findings of this deliverable.
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