When to 'fire' customers: Customer cost-based pricing

摘要

Activity-based customer costing (ABC) helps the firms to allocate overhead costs to specific customers and also enables to evaluate how profitable customers may destroy firm profits because of their high cost to serve. The research paper, using a model, has tried to show how customer cost based pricing (CCP) and the availability of customer cost information will impact customer acquisition) retention, and firm profits. It has also tried to assess the profitability using targeted pricing strategies based on customer cost information and whether the results on pricing and profits remain robust even when customers endogenously choose the level of service. The results are discussed in terms of customer cost heterogeneity and customer acquisition and retention strategies. (41 refs.)