Pricing configurations in digital servitization: How industrial firms make digital services commercially viable

Abstract

As industrial business-to-business firms increasingly pursue digital servitization to generate recurring revenues, making digital services commercially viable remains difficult, especially when value capture depends on customer access, data permissions, and intermediary-governed contractual arrangements. Although prior research has emphasized value creation and capability development in digital servitization, we know little about how industrial firms make digital-service pricing commercially viable. In this paper, we undertake a longitudinal exploratory qualitative case study of a leading European OEM operating in a mission-critical context. Our findings make three contributions. First, we develop a pricing-conditions perspective by showing that digital-service pricing depends on data access and interpretability, measurability and attribution, governance positioning, and service architecture and repeatability. Second, we identify four digital-service commercialization patterns of SLA-enhancing, incident-based, predictive, and planning-oriented, and enabling and infrastructural services that explain why digital services differ in how they can be packaged and defended commercially. Third, we develop four pricing configurations, i.e., ad hoc, customized, standardized, and value-based pricing, showing that pricing viability depends less on selecting a pricing approach than on aligning the service's commercial role, customer-value locus, feasibility conditions, and commercial and governance arrangements. In this sense, pricing in digital servitization is better understood as a configurational approach than an isolated price-setting decision and strategy. By doing so, the study extends research on digital servitization and industrial pricing, offering a configurational understanding of how, and under what conditions, digital-service pricing becomes commercially viable.