Using Modeling to Determine Price of a Service
Scenario and Context
In my business of solving Rubik's cubes for others, I have found that different customers are willing to pay different amounts for my services. I believe that there may be patterns in their "pain threshold for price" that are attributable to certain characteristics of the customer and their state of mind, some of which are observable and some of which can be ascertained through questioning.
To test my hypothesis, I asked a grad student to approach possible customers who were strolling through central park carrying Rubik's cubes, and ask them if they would help with a study by answering a few questions. It would take less than a minute. Sixty Rubik's Cube owners agreed to answer my questions and I gathered data on those 60 individuals. I hoped to be able to create a model that would allow me to get as much money from each customer as possible per job without exceeding their expectations with respect to price. I wanted to use my sample of size 60 as representative of the general population of Rubik's Cube owners.
I created a survey that asked the following questions:
1. What is your name? (This variable was not used to calculate anything and was captured just to be friendly.)
2. (I ascertained the gender of the person by observation.)
3. May I ask how old you are?
4. How anxious are you to have your cube solved?
5. How many hours have you been working on solving your cube without success?
6. What model of cube do you own?
7. How much would you be willing to pay to have someone solve it for you?
Using these questions I was able to compile a data table that included the following variables:
1. Name
2. Gender
3. Age
4. Urgency? (yes/no)
5. Hours spent trying to solve it themselves
6. Cube model
7. Maximum expected price
You just need to follow the same direction and choose whatever you want as long as I can talk about it with different data.
Attachment:- Assignment - Project.rar