The pricing of services

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The pricing of services

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dc.contributor.author Ng, Irene C. L. en_GB
dc.contributor.department University of Exeter en_GB
dc.date.accessioned 2009-01-21T10:47:21Z en_GB
dc.date.accessioned 2011-01-25T10:26:52Z en_US
dc.date.accessioned 2013-03-19T16:03:35Z
dc.date.issued 2004 en_GB
dc.description.abstract This paper aims to provide a deeper conceptual understanding of demand behavior and the pricing of services. It argues why all services are sold in advance and shows how the specificities of services result in two types of risks faced by buyers that buy in advance, that of unavailability of service and a low valuation of the service at the time of consumption. Furthermore, advanced buyers run the risk of not being able to consume at the time of consumption and this relinquished capacity may be re-sold by service firms. The paper develops a theoretical model that shows that advance prices are always lower than spot prices. Also, providing a refund to advanced buyers may improve revenue. A counter intuitive result demonstrates that the firm's strategy may be pareto optimal in that a guarantee against capacity unavailability as well as a refund guarantee against valuation risk may be offered to advance buyers at a lower advance price than if a refund offer is not provided. Finally, the study also shows that the firm can earn higher revenue when the risks are asymmetric. Profits are higher when the market faces high valuation risks than when the market faces unavailability risk. en_GB
dc.identifier.uri http://hdl.handle.net/10036/47813 en_GB
dc.language.iso en en_GB
dc.publisher University of Exeter en_GB
dc.relation.ispartofseries Discussion Papers in Management en_GB
dc.relation.ispartofseries 04/01 en_GB
dc.relation.url http://business-school.exeter.ac.uk/research/management/discussion_papers/ en_GB
dc.subject Services en_GB
dc.subject Advanced selling en_GB
dc.subject Revenue en_GB
dc.subject Yield management en_GB
dc.subject Refund en_GB
dc.subject pricing en_GB
dc.title The pricing of services en_GB
dc.type Working Paper en_GB
dc.date.available 2009-01-21T10:47:21Z en_GB
dc.date.available 2011-01-25T10:26:52Z en_US
dc.date.available 2013-03-19T16:03:35Z
dc.identifier.issn 1472-2939 en_GB
dc.description Working paper en_GB


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