A mixed-initiative model for quality-based e-services pricing

E-service pricing has become an important issue for the era of the service economy. In this study, we propose a novel pricing approach for e-services which considers perceived e-service premium. Profit (from provider perspective) and perceived value (from customer perspective) are two major components in the model. Our method is an extended cost-plus pricing approach that includes variable cost, fixed cost, profit goal, and e-service premium as the added value in the pricing process. Conversely, this work utilises multi-attribute utility theory to estimate customer utility based on perceived quality. The perceived quality is measured by a simple survey based on the concept of E-S-QUAL and E-RecS-QUAL (2005). The proposed pricing approach decreases pricing complexity by quantifying and converting perceived quality to perceived utility. In sum, this work makes three major contributions: (1) considering profits and utility simultaneously, (2) quantifying e-service premium characteristics, and (3) generating a personalised e-service price. This research is the first attempt at contributing e-service pricing approach and considers e-service characteristics premium in the pricing process.