An option-based approach for pricing perishable services assets

Citation

(1999), "An option-based approach for pricing perishable services assets", The Bottom Line, Vol. 12 No. 2. https://doi.org/10.1108/bl.1999.17012baf.004

An option-based approach for pricing perishable services assets

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An option-based approach for pricing perishable services assets

J.H. Finch, R.C. Becherer and R. Casavant in Journal of Services Marketing(UK), 1998 Vol. 12 No. 6: p. 473 (11 pages)

Examines whether the concept of option pricing ­ borrowed from financial theory ­ can be applied to perishable service goods such as theatre tickets or airline seats. Looks at work on pricing strategy, the pricing of services and option pricing theory before developing a model applying the latter theory to the pricing of hotel accommodation. Works through the model to show how it can be used to predict revenue and allow management to make decisions as to when price reductions are beneficial to overall sales revenue. Concludes that the financial concepts associated with pricing options and the option to abandon have a role in developing approaches to price setting in perishable services.

Subject(s): Pricing, Financial services, Services marketing

Style: Theoretical with application in practice

Reference: 27AY996 (1 credit)