Research on choices of methods of internet of things pricing based on variation of perceived value of service
Abstract: With the rapid
progress of Internet of Things technology, the information service of IoT has
got unprecedented development, and plays an increasingly important role in real
life. For the increasing demand of information service, the pricing of
information service becomes more important. This paper aims to analyze the
strategic options and payoff function between information provider and
intermediaries based on Stackelberg game. Firstly, we describe information
service delivery method based on the Internet of Things specific function.
Secondly, we calculate the consumer demand for the information service.
Finally, we explain two kinds of strategic options by the game theory, and then
discuss the optimal pricing method of information services based on profit
maximization.
Design/methodology/approach: To achieve this objective, Considering the
consumer perceived value of Internet of Things Service changing, we establish a
Stackelberg model in which the supplier is the leader followed by the
middleman. Then, we compare the advantages of using individual pricing with
that of bundling pricing.
Findings: The results show that whether information providers adopt
bundling pricing strategy or individual pricing strategy depends on the cost of
perception equipment, if information providers want to adopt individual pricing
strategy, the variation of consumers’ perception value of information services
must meet certain conditions.
Research limitations/implications: the providers make price for the
information service, in addition to continuously improve the quality of
information service, it also devotes resources to tapping and understanding
market information, such as the sensor device price, the variation of
perception value of information services and so on, so as to create competitive
advantage. This paper is just a preliminary model, it does not take into
account the effect of mixed bundling.
Originality/value: In this research, a new model for price information
service with the game theory is proposed. To the authors' knowledge, it is the
first time to study the pricing of information service with the game theory, It
discuss the impact of consumers’ perceived value for the equipment of internet
of things on pricing strategy, and it also analyze the impaction of consumers’
perceived value for information service on pricing strategy, the research shows
that the information providers should take different strategies based on the
specific situations to maximize the profit on the information service market of
the IOT.
Author: Wei Li, Lijun Mei, Kai
Nie
Journal Code: jptindustrigg130047
