Modeling and Prediction of Monetary and Non-monetary Business Values

In existing business model frameworks little attention is paid to a thorough understanding of the perceived customer value of a business' offering as compared to competing offers. In this paper, we propose to use utility theory in combination with e3value models to address this issue. An actor's joint utility function specifies how much value the actor attaches to a given product or service's different qualities. Competing value offerings map to different points on the customer utility function, since they provide certain quantities of each quality. Since the customer can be expected to exhibit a utility maximizing behavior, his/her choices between offerings can be predicted. Thus, given the proposed utility extension, it becomes possible to quantitatively reason about the relative customer value of an offering compared to those of the competition. This, in turn, allows the optimization of price, the key ingredient in any business model.

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