Conceptualizing service export price optimization

Abstract

Purpose

The purpose of this paper is to try to formulate a conceptual model for service-oriented export pricing by looking at both demand- and supply-side considerations by taking export price as a function of domestic price of service.

Design/methodology/approach

Continuous time optimization technique has been adopted for maximization of the profit earned by firms in the domestic and foreign market for both demand- and supply-side scenarios. Dynamic simulations have also been carried out to find out the sensitivity of parameters in diverse scenarios.

Findings

Different results have been received for demand and supply sides for export price optimization. Various pricing objectives have been aligned to the price determining parameters in accordance with the dynamic simulation performances.

Research limitations/implications

Continuous time optimization served our purpose, as sustainability of the same decision over a longer period was not considered. However, discrete time optimization can be taken up, if the effect of a series of decisions is scrutinized. More flexibility can be incorporated in the model, if a range of domestic price is considered over the singular domestic price.

Practical implications

This paper is significant for those firms, which are willing to extend their operations beyond the national boundary. The models derived here can give them an idea about how to price service in foreign market.

Originality/value

Aligning pricing objectives with export price determining parameters by considering demand and supply side perspectives in a continuous time optimization model is a new contribution in the existing literature.

Citation

Sinha, A. (2015), "Conceptualizing service export price optimization", International Journal of Commerce and Management, Vol. 25 No. 3, pp. 309-329. https://doi.org/10.1108/IJCoMA-11-2013-0117