Innovative pricing: a case of pricing for profits on the mobile internet Online publication date: Wed, 07-Jul-2004
by Andreas Jonason, Bo Holma
International Journal of Information Technology and Management (IJITM), Vol. 3, No. 1, 2004
Abstract: Innovative pricing addresses the pricing challenge faced by mobile operators as a result of the transition from the second to the third generation of mobile telephony. A central issue in the success of this new technology is the charging structure towards end-users. Pricing new services too high will result in a low take-up rate of the service, whereas pricing the service too low could result in low and unsatisfactory revenues. This study presents the results of a consumer study in the UK consisting of a sample of 2000 interviews with potential end-users of third-generation services. The principal conclusion is that the previously accepted price-optimisation theory of charging per megabyte is insufficient for the introduction of wireless broadband services. This opens up a considerably broader and more complex pricing problem that requires a completely different set of theoretical tools and involves a considerable element of innovation in how the price is set.
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