Simulating the Influence of Price Auditing on the Corporate Profit in Business-to-Government Relationships: Experiences from a Case Study in the German Automotive Industry

n business-to-government (B2G) relationships, companies managers need to consider the national price law when they price products. In Germany, legal regulations on pricing were set to limit the corporate profit. Their compliance is ensured by price audits. Due to the absence of national price regulations in several NATO states, many procuring authorities apply the German regulations to their contracts and request German administrative assistance for auditing prices. In this paper we outline how the German legal framework allows for the application of different strategies and scenarios of how to price automotive industry products. The scenario technique is used to simulate a price audit on a real-life governmental customer project. We report on our experience about whether there is a possibility to simulate price audits on pricing scenarios. The result of the price audit simulation clearly shows the influence of the chosen strategy on the contribution margin as well as on the corporate profit for each price auditing scenario that was tested