Profit criteria involving risk in price setting of virtual products
For a multiplicative demand the optimal price is identical for any increasing utility function. For an additive demand, pricing strategies are presented for three profit criteria: expectation, target and percentile. Showing how to calculate the non-dominated set of criteria values that can aid in selecting the preferred price. A risk-averse retailer does not necessarily set a lower price than a risk-neutral one. Our results are extended to a two-echelon supply chain.
risk pricing multiple criteria supply chain management decision analysis