A New Approach for Pricing Based on Passengers’ Satisfaction

Abstract

Abstract The growth of the rail transportation industry depends on providing adequate quality of service with reasonable pricing. Toward providing effective pricing strategies, one must find a measure to assess the effectiveness of ticket pricing. Despite the importance that pricing can have on the performance of businesses, it is mostly addressed based on managers’ own experiences. Moreover, data envelopment units employed for pricing are limited to showing the relationship between increasing service quality and increasing efficiency. Therefore, the main purpose of this study is to quantitatively evaluate ticket pricing from the perspective of passengers on one of the busiest rail routes, based on data envelopment analysis. First, train evaluation criteria are extracted by studying the literature. Then, the most influential criteria are identified based on the opinions of experts in rail transportation. The desirability and satisfaction level of each criterion are acquired for fifteen types of passenger trains. Finally, the ticket pricing efficiency is calculated based on the ratio between the train ticket prices and the quality of their services. The results show that out of fifteen examined trains, ten trains are inefficient in terms of pricing. To revise pricing, three decreasing, increasing and medial policies are introduced and illustrated in detail. All three policies are applied and the results are compared. Finally, it is investigated to verify in what environmental conditions each pricing policy can be more effective.