File(s) under permanent embargo
Measuring consumers' preferences for metered pricing of services
journal contribution
posted on 2011-11-01, 00:00 authored by C Schlereth, Bernd SkieraBernd Skiera, A WolkMetered pricing plans for services enable companies to increase their profits. Yet measuring consumer preferences for different forms of metered pricing is difficult, because metered prices simultaneously influence three consumer decisions: to purchase the service, to choose a particular pricing plan, and to use a particular quantity. These decisions strongly influence the number of customers that use the service, their usage, and profit. This article develops and validates augmented conjoint analysis methods that capture the interplay among these three decisions and allow for predicting the effects that different metered pricing plans have on consumer behavior and company's profit. The empirical study reveals that the optimal two-part pricing plan yields 36-49% higher profits than optimal pay-per-use or flat rate pricing plans. Consumers' reactions to changes in metered pricing plans are very heterogeneous. The fixed fee of a two-part pricing plan strongly influences the number of subscribers but hardly influences their usage. In contrast, changes in marginal prices strongly affect consumers' usage but not their subscription. Data collected through ranking- and choice-based conjoint analysis yield comparable willingness-to-pay estimates and substantially outperform contingent valuation. Market researchers should also use pricing plan formats instead of usage formats to elicit the preferences for two-part pricing plans.
History
Journal
Journal of service researchVolume
14Issue
4Pagination
443 - 459Publisher
SAGE PublicationsLocation
London, Eng.Publisher DOI
ISSN
1094-6705eISSN
1552-7379Language
engPublication classification
C1.1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2011, The Author(s)Usage metrics
Categories
No categories selectedKeywords
Licence
Exports
RefWorks
BibTeX
Ref. manager
Endnote
DataCite
NLM
DC