“Pricing is cited by 45% of corporate buyers as a major challenge that often impedes nanotech deals. Buyers lament that sellers frequently pay attention only to the cost of their own components, missing the big-picture view,” said Lux Research Senior Analyst David Lackner. “Only 15% of sellers, however, see pricing as a major problem. They have such faith in their products’ performance gains that they view pricing as a minor issue that will work itself out.”

To build a framework for assessing pricing strategies in nanotech, Lux Research conducted 40 in-depth interviews with executives on both sides of the nanotechnology negotiating table - twenty small-cap and start-up sellers that develop nanotech applications as well as 20 large corporations that buy and/or license them. The report finds that buyers and sellers agree on the big picture. More than 70% of buyers and specialists alike say that their ideal nanotech deal is a long-term relationship that represents a win-win for both sides. Buyers like long-term deals because they offer continued access to innovation, sellers like the access to distribution channels, marketing capabilities, and knowledge of end customers that these deals bring. However, buyers and sellers disagree on everything else. Most buyers want sellers to manufacture and support component products, while most sellers would prefer to license patents and avoid manufacturing. Buyers demand exclusivity from sellers, but sellers would prefer not to offerit. And while buyers do anything they can to avoid having a single source for a component, specialists think the uniqueness of their solutions should be the top factor in setting prices.

The report finds that within the next four years, the tug-of-war between buyers and sellers will wind down as the imbalances between buyers’ willingness to pay and sellers’ expectations work themselves out. Two sustainable long-term equilibrium points are possible: Commodity supply, in which interchangeable sellers can sell only on the basis of price and availability, and win-win, in which sellers earn long-lasting premiums. The report forecasts which nanotechnology segments will end up in each equilibrium outcome. “In commodity supply cases, such as the crowded field of metal oxide nanoparticles, where more than 110 companies compete globally today, corporations should employ tactical vendor/supplier relationships,” said Lackner. “In win-win segments, however, we recommend that corporations secure option rights to collaborate with desirable nanotech startups to prime the pump ahead of urgent need.”