Salesperson pricing discretion: Exploring the contingent effects and customer outcomes

Abstract

There is tension among practitioners regarding whether to offer salesperson-level pricing discretion beyond discounts in B2B sales, with the literature providing mixed evidence. Using a multi-study approach, we explore the dynamics surrounding salesperson pricing discretion, addressing crucial gaps within the existing pricing discretion literature, especially concerning the contingent factors that can drive salesperson pricing discretion’s effects. Using 504,446 transactions, Study 1 offers an in-depth examination of the effects stemming from salesperson-exercised pricing discretion. Besides finding a non-linear relationship between salesperson-exercised pricing discretion and manufacturer performance, in contrast to the existing literature, which primarily considers market- and firm-level factors, the current paper identifies three pivotal salesperson-level variables that moderate the impact of exercised pricing discretion on manufacturer profitability. Study 2 extends our exploration with a field investigation focusing on pricing discretion's effects on customer-level outcomes, showing that discretion positively affects B2B customer satisfaction, purchase quantities, and downstream customer performance.