Pricing Optimization of Products and Value-added Services based on Multinomial Logit Model

Wei Qi, Junlin Pei, Xuwang Liu, Xiwang Guo, Jiacun Wang, Ying Tang

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

The quality of durable consumer goods is more and more concerned by consumers, and the development of value-added services to improve product quality has become an important way for enterprises to obtain profits. Based on the multinomial logit (MNL) model, this paper establishes a product line optimization model considering value-added services, which helps find the optimal pricing, market share and maximum profit. Through numerical experiments, the effects of the ratio of service price to product price, product quality, service quality, utility loss caused by product failure on the optimal solutions are studied. The study finds that when developing a product line, increasing the relative price of services while reducing product pricing is the optimal strategy. The research results can provide theoretical basis and decision support for the pricing of durable consumer goods and value-added services.

Original languageEnglish (US)
Title of host publication2022 IEEE International Conference on Systems, Man, and Cybernetics, SMC 2022 - Proceedings
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages1219-1223
Number of pages5
ISBN (Electronic)9781665452588
DOIs
StatePublished - 2022
Event2022 IEEE International Conference on Systems, Man, and Cybernetics, SMC 2022 - Prague, Czech Republic
Duration: Oct 9 2022Oct 12 2022

Publication series

NameConference Proceedings - IEEE International Conference on Systems, Man and Cybernetics
Volume2022-October
ISSN (Print)1062-922X

Conference

Conference2022 IEEE International Conference on Systems, Man, and Cybernetics, SMC 2022
Country/TerritoryCzech Republic
CityPrague
Period10/9/2210/12/22

All Science Journal Classification (ASJC) codes

  • Electrical and Electronic Engineering
  • Control and Systems Engineering
  • Human-Computer Interaction

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