Optimal selling price and replenishment time with a limited-time free trial

Lin Feng (), Konstantina Skouri () and Ya-Lan Chan ()
Additional contact information
Lin Feng: Southwest Jiaotong University
Konstantina Skouri: University of Ioannina
Ya-Lan Chan: Asia University

Annals of Operations Research, 2025, vol. 349, issue 3, No 6, 1639-1661

Abstract: Abstract Nowadays, online stores have become the choice markets for consumers. However, a main disadvantage of this choice is that consumers hardly have opportunities to inspect the product. So, a free trial period could be used as a marketing tool giving prospective customers the ability to evaluate and inspect the products before making their orders. Hence, the disadvantage of lack of product experience diminishes, contributing to sales increase. In addition, pricing is a well-known powerful and effective marketing tool towards increasing sales. As a result, pricing and free trials are two of the most powerful and effective marketing tools to increase sales and profitability. Nevertheless, in inventory management literature, the studies on the joint impact of free trial and selling price are rarely seen. Within the EOQ framework, we propose a model, in which the seller has the ability to determine whether to offer free trials or not, and then to decide the optimal selling price and replenishment cycle so that the total profit is maximized. Furthermore, we establish several theoretical results and try to answer the following important and relevant questions: (1) the conditions under which the seller should offer a free trial to prospective customers, (2) the impact of a free trial offer on the replenishment cycle and selling price, and (3) the influence of price elasticity on the selling price and order quantity. Finally, through sensitivity analysis we study the effect of several parameters on the optimal solution.

Keywords: Pricing; Marketing; Free trials; Economic order quantity; E-commerce (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10479-025-06564-1 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:annopr:v:349:y:2025:i:3:d:10.1007_s10479-025-06564-1

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-025-06564-1

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().