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School of Business | Department of Information and Service Economy | MSc program in Information and Service Management | 2016
Thesis number: 14672
Finding the optimal pricing model for spare parts - Case company: Vaisala Oyj
Author: Hakala, Antti
Title: Finding the optimal pricing model for spare parts - Case company: Vaisala Oyj
Year: 2016  Language: eng
Department: Department of Information and Service Economy
Academic subject: MSc program in Information and Service Management
Index terms: hinnoittelu; pricing; kannattavuus; profitability; yritykset; companies
Pages: 37
Key terms: spare parts; pricing model
Pricing has a strong impact on the profits in any company. A successful pricing strategy helps a company to achieve optimal results in profitability and customer satisfaction. Importance of pricing of after sales offering is often neglected. The objective of this Master's Thesis is to define a spare part pricing model that is suitable for case company Vaisala Oyj.

A literature review of pricing related academic studies is conducted to create a theoretical basis on pricing. Although pricing is part of the marketing mix, service pricing continues to be a difficult subject for companies. The value of services is more difficult to define compared to the value of products. Spare parts combine characteristics from both products and services and mixed approaches are used to define prices for them. Cost-, market-, and value-based pricing methods are used for spare part pricing based on the maturity of the pricing function in companies.

This study is conducted as a qualitative case research. Since the spare part pricing methods are not widely studied and not many theories are created specially for spare part pricing, an inductive case study is chosen to create a pricing strategy for the case company. Long interviews with both open and close ended questions is used to study the current situation of the pricing and spare part offering in the case company. Same interview strategy is used to study the spare part offering and pricing strategies on three other companies. Based on the results of the study, a suitable pricing model for case company is proposed.

The study confirmed that spare part pricing is often neglected compared to new product or service contract pricing. Cost based pricing models are widely used as they are relatively simple to implement and require limited research on market situation and customer value. A cost based method that takes into consideration some levels of competitive situation and value to customer is proposed as a cost effective way of creating list prices for spare parts.
Master's theses are stored at Learning Centre in Otaniemi.