Navigating public procurement: strategic sales and pricing approaches in business-to-government markets

With over $11 trillion in annual public procurement spending, business-to-government (B2G) remains a vast yet underexplored domain in sales and pricing strategy research. Institutional norms and regulatory frameworks challenge conventional business logic, raising questions about how managers should adapt sales and pricing strategies to the formalized public market. Based on expert interviews and a large-scale, cross-industry study, we investigate the antecedents and performance consequences of firms’ sales and pricing strategies in B2G contexts. We identify two distinct selling approaches: (1) proactive firms engaging before request for proposal (RFP) release, and (2) reactive firms excelling after RFP release, with mid-level proactiveness harming performance. Product complexity further amplifies these performance effects. For pricing, we demonstrate performance benefits of value-based pricing. These sales and pricing approaches are shaped by firms’ orientations, which provide the foundation for the capabilities required to execute them. Our findings challenge the assumption that B2G exchanges are purely transactional and price-driven and offer guidance for managers and policymakers to create value in public markets.