| Title |
How to charge in servicizing: Per period or per use? |
| ID_Doc |
76844 |
| Authors |
Arani, HV; Pourakbar, M; van der Laan, E; de Koster, R |
| Title |
How to charge in servicizing: Per period or per use? |
| Year |
2023 |
| Published |
European Journal Of Operational Research, 304, 3 |
| DOI |
10.1016/j.ejor.2022.05.002 |
| Abstract |
In a servicizing business model, the service provider sells a product's functionality, not the product per se. This study aims to find the best profit-maximizing pricing strategies for this business model that can also yield the highest consumer welfare with minimal environmental impact. This approach identi-fies win-win-win strategies satisfying profit, planet, and people objectives. As providers charge consumers based on usage (pay-per-use) versus a regular flat fee (pay-per-period), the economic, environmental, and welfare implications of such strategies remain unclear. We tackle this problem using a stylized game -theoretic model where the service provider first designs the pricing schemes, and consumers react by adjusting use. When offering a single product, we observe that pay-per-use policies outperform pay-per -period when the service provider is cost-inefficient or small-scale. Also, where per-use consumers are not very sensitive to payment frequency, service providers tend to exclude low usage-valuation users. Outperformance also prevails when the proportion of low-use consumers is sufficiently low. Our results show that a win-win strategy can be achieved by offering a pay-per-use policy to high usage-valuation consumers, however, a win-win-win strategy is never possible. We also analyze the problem for a sit-uation where the service provider offers a product line including green and regular products. Then, we characterize possible win-win-win strategies that hinge on environmental impact from different phases of a product's lifecycle. We extend the models to allow SP i) influence the size of market segments and ii) decide on product greenness levels in different phases of its lifecycle. & COPY; 2022 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY license ( http://creativecommons.org/licenses/by/4.0/ ) |
| Author Keywords |
Servicizing; Product-Service systems; Pricing; Sustainable operations; Incentive design |
| Index Keywords |
Index Keywords |
| Document Type |
Other |
| Open Access |
Open Access |
| Source |
Science Citation Index Expanded (SCI-EXPANDED) |
| EID |
WOS:001017246200001 |
| WoS Category |
Management; Operations Research & Management Science |
| Research Area |
Business & Economics; Operations Research & Management Science |
| PDF |
https://doi.org/10.1016/j.ejor.2022.05.002
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