ESTIMATING WILLINGNESS-TO-PAY AND PRICE SENSITIVITY FOR EDUCATIONAL SERVICES USING ADAPTIVE CHOICED-BASED CONJOINT ANALYSIS
Authors
Keywords
willingness to pay, reservation price, price sensitiveness, adaptive choice-based conjoint analysis, educational service
Summary
In this study, we present and prove an empirical approach for measuring willingness-to-pay and price sensitivity for educational services (master's programs in economics and management) offered in substitution setting with low visibility of the actual consumer value. Our experiments are based on adaptive choice-based conjoint analysis. We estimate willingness-to-pay on an individual level, based on part-worth utility estimates derived using hierarchical Bayesian approach. At the aggregate level, we specify and derive market response functions and thresholds at which price sensitivity changes dramatically. Based on part-worth estimations we build a „market simulator”, based on optimization gradient method. Based on it we found the „optimal” product bundle that maximizes the share of consumers' preferences in two dimensions – institutional and competitive. We found that the present supply of integrated educational services is not relevant to the structure of preferences of the potential students. In terms of financial management of educational institutions, there is considerable potential for optimizing cash flows by rethinking and changing their price policies – from uniform charges for different master’s programs towards nonlinear pricing.
Pages: 31
Price: 3 Points
