Case | HBS Case Collection | September 2013

SafeBlend Fracturing

by Benson P. Shapiro, Frank V. Cespedes and Alisa Zalosh

Abstract

The CEO of SafeBlend Technologies must set a price for the company's environmentally friendly fracturing fluid additive. The firm is negotiating a new contract with its biggest client, Bristol Natural Gas. For the last two years, SafeBlend has been the sole provider of additives to Bristol due to aggressive negotiation and limited competition. New competitors are entering the market and the CEO believes one competitor is prepared to offer Bristol a chemically free additive for 50% less per gallon than SafeBlend. Anticipating lower bids from competitors, he considers reducing the price in the new contract to maintain the relationship with Bristol—despite the impact on revenue. However, the competition may not be able to supply enough additive to meet all of Bristol's needs, so he also considers the impact of setting a more competitive and profitable price that assumes losing only a portion of Bristol's business.

Keywords: Technology; Customer Relationship Management; Price; Negotiation; Competitive Advantage; Environmental Sustainability; Energy Sources; Sales; Energy Industry;

Citation:

Shapiro, Benson P., Frank V. Cespedes, and Alisa Zalosh. "SafeBlend Fracturing." Harvard Business School Brief Case 914-513, September 2013.