Study on differential pricing decisions for the product with multiple warranty periods for free replacement policy

Warranty service has an important role in the product transactions. The price is related to length of warranty period of product. Considering the reality, based on the consumer utility theory, assuming free replacement policy and the product failure with Weibull distribution function, this paper studies the differential pricing issues for the product with multiple warranty. This paper analyzes the optimal pricing strategy, and verifies the validity of the model through the numerical analysis and analyzes the difference between differential pricing and single pricing. Then this paper analyzes the impact of the consumer shift flexibility to the benefits of manufacturers.