3D Printing-as-a-Service: An Economic Analysis of Pricing and Co-creation
Posted: 16 Sep 2020
Date Written: August 4, 2020
3D printing technology has opened up possibilities of product design collaborations between device providers and customers. Further, to enable such co-creation environment, the device providers are offering 3D printing as a service. Although previous literature has studied pricing and quality issues in the traditional manufacturing setup, these papers have not analyzed such decisions in the 3D printing supply chain setting. Therefore, several important questions are unanswered from the perspective of the 3D printing device provider. For example, what is the appropriate pricing model for providing 3D printing as a service (3DaaS)? How does the players' relative impact on product quality effects the 3DaaS firm's pricing strategy? We develop a game-theoretic model and discuss various insights. Our analysis reveals that the fixed-fee pricing model generates a higher profit of the 3DaaS firm if the relative impact of the customers on the product quality is high. However, if the firm's relative impact on the product quality is high, the pay-per-build pricing model generates higher profit. Interestingly and somewhat counter-intuitively, as the relative impact of the firm on the product quality increases, the firm may increase or decrease the unit price. Finally, our paper suggests that due to the lower price charged towards 3D printing service, product co-creation is not a long run viable strategy for the upstream firms.
Keywords: Digital Operations; 3D Printing; Pricing; 3D-as-a-Service; Co-creation; Supply Chain
JEL Classification: L43, L51, L52
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