Abstract
The B2B technology service industry presents several distinctive features that challenge service providers' strategic decision-making processes. Firstly, the business customers in this context sign a legally binding contract upon service purchase. Secondly, the firm's pricing strategies directly impacts the length of the service contract agreed upon by the client. Thirdly, service providers must continuously enhance their technology service offerings to maintain a competitive edge.To address the unique concerns of service providers in this market, we present a structural modeling approach that quantitatively evaluates business customers' contractual decisions within the dynamic and ever-evolving technology service landscape. Our study contributes to the existing literature on forward-looking dynamic models by integrating the three key market features into a comprehensive modeling framework. The substantive insights gained from our model enable service providers to accurately assess the benefits and risks associated with technology advancement. Furthermore, we identify an optimal pricing strategy that assists service providers in maximizing their contract revenue through counterfactual analysis.
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