Strategic-Pricing Policy Based on Analysis of Service Attributes

Abstract

This study proposes a strategic pricing model for service industries that can offer customers enhanced value through lower prices while maintaining appropriate features. Based on a correlation of the categories in the refined Kano model and frequency of use of service items, the integrated model proposes that service items and attributes should be individually assessed with a view to making appropriate decisions on whether items should be deleted from service packages, offered for a separate charge, or outsourced. The model also provides guidance on prioritizing decisions regarding service items or attributes. The application of the proposed model is demonstrated in a case study of a 5-star hotel in Taiwan. The study concludes that strategic decisions on the composition of service modules can lead to appropriate pricing policies that enhance customer value and assist companies to control costs.