Two‐stage pricing of products and services considering different competitive environments

Abstract

AbstractDesigning a product line that considers value‐added services (VASs) is a strategic move for enterprises with diversified customer needs. Additionally, a dynamic pricing strategy that can respond to changes in the external environment is crucial for enterprises. This study investigates product and VAS price adjustments for enterprises in monopolistic and oligopolistic competitive environments, respectively, based on the multinomial logit model. A two‐stage pricing model is developed for products and services to obtain the optimal pricing strategy. The findings reveal that customers’ strategic behaviors significantly impact on enterprises’ pricing decisions. When adjusting prices, enterprises need to consider the strategic behaviors of customers to ensure the rationality of pricing. Furthermore, irrespective of the competitive environment faced by enterprises, there is a need to emphasize the importance of dynamic pricing. Making appropriate adjustments to prices in the second stage can, overall, enhance the profitability of the enterprise.