Price Increases and Their Financial Consequences in International Business-to-Business Selling

Abstract

Although price increases are common in business-to-consumer and business-to-business (B2B) markets, research examining the consequences of price increases on financial performance outcomes in B2B contexts is scarce. This study takes a relationship perspective on price increases and examines how a portfolio price increase affects the financial performance of the customer relationship and whether and how this effect varies between international business customers from different cultures. Based on objective data from 966 international B2B customers of a chemical goods company, this study examines a large-scale field intervention. Results show that higher portfolio price increases, although rooted in an increase of upstream costs, bring more severe harm to B2B customers’ sales revenue than lower portfolio price increases. These consequences vary with customers’ cultures as B2B customers with culture-specific communal norms are more susceptible to the magnitude of portfolio price increases than customers without such norms. International B2B companies, therefore, need to refrain from implementing uniform price increases and should consider their business customers’ cultural origin when designing and implementing price increases.