Pricing under quality of service uncertainty: Market segmentation via statistical QoS guarantees |
| |
Authors: | Hemant K Bhargava Daewon Sun |
| |
Institution: | 1. Graduate School of Management AOB IV, Room 135, University of California Davis, Davis, CA 95616, United States;2. Department of Management, University of Notre Dame, 366 Mendoza College of Business, Notre Dame, IN 46556, United States |
| |
Abstract: | This article examines how performance-contingent pricing schemes with long-term statistical performance guarantees can be applied to many IT services. We study two forms of performance-contingent pricing, with rebate proportional to failure rate and fixed rebate for below-threshold performance. We show that threshold-performance contingency pricing can increase both profits and fairness (customers who receive higher benefits pay higher effective price) relative to standard pricing. But an even better solution is to offer a menu of performance guarantees: this can increase the firm’s profit and segment the market. Only service providers whose performance level is sufficiently better than the industry standard can benefit from this pricing mechanism. |
| |
Keywords: | Quality of service Statistical guarantee Broadband Contingency pricing Price discrimination |
本文献已被 ScienceDirect 等数据库收录! |
|