A Quality-Based Pricing Model for Internet-Enabled Services

Abstract

E-services are a contemporary emergent issue of e-commerce that can reduce costs and increase efficiency, enhance services to maximize profits, and enable customer relationships. Due to the popularity of e-services, e-service pricing is still a contentious issue, and e-service providers must consider customer perspectives when deciding the costs. This study utilizes perceived service quality as the pricing basis to generate an effective e-service price. The objectives of this paper are as follows: (1) to establish a pricing method based on service quality of a specific e-service; and (2) observe the relationship between the price and the customer’s perceived value. The proposed research approach employs the multi-attribute utility method, which can quantify the perceived service quality to estimate a final price from the proposed pricing approach. This study presents two major conclusions from selected cases (Wretch), as follows: (1) this paper investigates the relationship between price and quality. When the perceived quality of a user is poor, e-service providers should reduce costs and target profits to introduce a price lower than the original fee. Conversely, when the perceived quality of a user is good, e-service providers may reasonably increase the original price; and (2) this research investigates the relationship between price and perceived value. The generated price must be acceptable and appropriate to users, which enables them to generate more value of the e-service. In summation, the main contribution of this research is a pricing model for a specific e-service that uses a multiple attribute utility approach to establish an appropriate price based on perceived value. Keyword: Service Pricing, Internet Service, and Service Quality