Mixed Bundled Pricing Strategies for Product and Service Considering Network Effects

Abstract

The network effects of product and service have a significant impact on the pricing of product and service. As an effective sales strategy, bundling has become a new way for enterprises to increase profits. We study the optimal pricing, the optimal market share and the maximum revenue of the hybrid bundling strategy for both product and service in the presence of network effects. Based on MNL model, we analyze the optimal solution and profit difference of mixed strategy binding. The results show that the market share of mixed bundling strategy is concave in terms of revenue function when negative network effect is taken into account, and the optimal pricing, optimal market share and optimal revenue solution are obtained. Finally, the importance of considering negative network effects in product and service pricing is illustrated by numerical simulation. The research results can provide theoretical basis and decision-making reference for enterprises with negative network effect product in terms of product and service pricing.