Designing professional services: Pricing and prioritization

• 成果类型: Article
• 署名作者: Wu, Chenguang (Allen); Jin, Chen; Veeraraghavan, Senthil
• 署名单位: Hong Kong University of Science & Technology; National University of Singapore; University of Pennsylvania
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13996
• 发表日期: 2023
• 页码: 2578-2595
• 关键词: priority; queues

摘要

We study the optimal design of a professional service in a mixed market of customers with heterogeneous skills and capabilities of using such service. Expert customers can avail of the service on their own, whereas amateur customers find it challenging to deploy the service and can only procure the service through an intermediary who resolves the technical issues. We develop a model that captures the essential trade-offs in such settings: heterogeneity in customer expertise, decentralization between a service provider and intermediary, and congestion due to limited capacity. We analyze how customer expertise differences drive the equilibrium outcomes under various pricing and priority schemes. We find that a sufficient base of amateur customers allows expert customers to free-ride under single pricing. Price discrimination can fully allay such free-riding, but it may drive prices downward. Price discrimination also favors expert customers under the First-Come-First-Served (FCFS) policy, but such preference is generally reversed under prioritization. Specifically, prioritizing amateur customers can bring revenue and welfare gains relative to the FCFS policy and a policy that prioritizes expert customers. Our results offer normative guidelines for managing professional services, clarifying regimes for price and priority discrimination, along with revenue and welfare implications.