Estimating reservation prices for product bundles based on paired comparison data

Abstract

Reservation prices have evolved as important tool for designing and pricing new products or bundles of products where a reservation price for an item can be interpreted as maximum amount of money that a consumer is willing to pay for that item. In this paper, focusing on product bundles, two types of data collection-an already known and a new one-based on direct elicitation of reservation prices using paired comparison data are discussed. Variants of conjoint analysis that were proposed so far in this context are used, an explicit evaluation of two methods is described, and an example by means of empirical data from a seat system offered by a German car manufacturer is used as demonstration of the applicability of the methodology suggested. © Springer-Verlag Berlin, Heidelberg 2005.