A pricing model for Internet of Things-based fleet services to support equipment sales

Marttonen-Arola, Salla, Kärri, Timo, Sinkkonen, Tiina and Pirttilä, Miia (2019) A pricing model for Internet of Things-based fleet services to support equipment sales. Journal of the Operational Research Society. pp. 1-11. ISSN 1476-9360

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Abstract

Servitisation and rapid technological development have made data-based services a feasible way for many manufacturing companies to increase their cash flow and support their core products. In this article, an analytical model is presented for studying the development costs and pricing of new Internet of Things-based services for especially populations, or fleets, of industrial production equipment and machines. The model suggests the optimal price of a fleet service as a function of the life cycle of the service, the required rate of return, the size of the fleet, and the extent of economies of scale in fleet research and development. This article contributes to the research on servitisation of manufacturing, and sheds light on the different natures of service and equipment sales. Also a numerical study is presented to bring forward the managerial implications of the model.

Item Type: Article
Additional Information: ** From Crossref via Jisc Publications Router.
Uncontrolled Keywords: Marketing, Management Science and Operations Research, Strategy and Management, Management Information Systems
Divisions: Faculty of Technology > School of Engineering
SWORD Depositor: Publication Router
Depositing User: Publication Router
Date Deposited: 10 Mar 2020 10:44
Last Modified: 10 Mar 2020 10:44
URI: http://sure.sunderland.ac.uk/id/eprint/10319

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