Have an idea?

Visit Sawtooth Software Feedback to share your ideas on how we can improve our products.

Can MBC deal with fixed price?

I'm currently working on a MBC project which our client has fixed price for some options.

The menu allow people to pick a product package from $30 to $52, then some fixed price add-ons.

For example, you either pick a $30 package plus a $12 add-on; or a $40 package plus a $12 add-on. The price of the add-on will always be $12.

Can MBC actually deal with that?
asked Jun 1, 2017 by Emma

1 Answer

0 votes
Yes, MBC models can involve options on the menu that don't change price.  But, the software requires that every model you build include at least one independent variable (beyond the alternative-specific constants).  There are two ways around this:

1) Choices of fixed alternatives on the menu are often significantly affected by prices of other items on the menu (as cross-effects), so you can specify certain other cross-effects that are significant.

2)  Often times in MBC modeling you want to collapse the choice of multiple (synergistic) alternatives into a single dependent variable with a greater number of levels (we call these "combinatorial dependent variables" in the documentation).  When you implement combinatorial coding of the dependent variable that involves some options that have price variations and some that are fixed alternatives, there will certainly be some independent variables (such as price variations) that you will specify in the software to get around the restriction that all models must have at least one independent variable.
answered Jun 1, 2017 by Bryan Orme Platinum Sawtooth Software, Inc. (191,015 points)