Pricing Services Subject to Congestion: Charge Per-Use Fees or Sell Subscriptions?

• Published in: Manufacturing & service operations management Vol. 13; no. 2; pp. 244 - 260
• Main Authors: Cachon, Gérard P, Feldman, Pnina
• Format: Journal Article
• Language: English
• Published: INFORMS 01.04.2011
• Series: Manufacturing & Service Operations Management
• Subjects: game theory; operations strategy; pricing and revenue management; queueing theory; service operations

Should a firm charge on a per-use basis or sell subscriptions when its service experiences congestion? Queueing-based models of pricing primarily focus on charging a fee per use for the service, in part because per-use pricing enables the firm to regulate congestion--raising the per-use price natura...