A tale of two pricing systems for services

Due to advances in technology and the rapid growth of online service offerings, various innovative web-based service models and delivery methods have appeared—including several free services. It is not always clear whether and how these emerging mechanisms for online service delivery will result in...

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Bibliographic Details
Published in:Information systems and e-business management 2012-03, Vol.10 (1), p.19-42
Main Authors: Lyons, Kelly, Messinger, Paul R., Niu, Run H., Stroulia, Eleni
Format: Article
Language:English
Subjects:
Advertising
Analysis
Business and Management
Business models
Customer satisfaction
Customer services
Fees & charges
Information systems
Information Systems Applications (incl.Internet)
IT in Business
Management
Mathematical analysis
Mathematical models
Monopolies
On-line systems
Online
Original Article
Pricing
Pricing policies
Service industries
Service introduction
Social networks
Studies
Third party
Virtual communities
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Summary:Due to advances in technology and the rapid growth of online service offerings, various innovative web-based service models and delivery methods have appeared—including several free services. It is not always clear whether and how these emerging mechanisms for online service delivery will result in profitable businesses. In this paper, with an eye towards beginning to understand the issues involved, we present an analytical model of rational customer choice between available service plans. In particular, our model predicts how a monopoly service provider should devise its plans, if it understands such customer behavior. We then describe how this model would need to be extended in order to reflect increasingly inexpensive and even free service offerings.
ISSN:1617-9846
1617-9854
DOI:10.1007/s10257-010-0151-3