The SPC Network Price Simulation Tool

The SPC Network Price Simulation Tool is an online training resource to illustrate the potential impact on both demand and revenue in response to changes in price, given specified price elasticities on demand and/or usage.

Three different aspects of price elasticity effects are addressed by the model. These are introduced below:

1: Basic
This allows the Trainer to generate a number of scenarios to help illustrate the basic concepts. A typical scenario might consist of three different price plans (such as simple minute/Gigabyte charging with or without a fixed monthly fee element, or a multi-level charging structure with different price points attached to different bundles of minutes or data. Each price plan then has a number of customers allocated to it, with these then being distributed across a range of per-month usage levels. The model will then calculate the total revenue generated by this customer base.

The Trainer would also specify customer and usage price elasticities. Trainees can then vary various elements of the price plans and see the impact on the overall total revenue, once the impact of the defined price elasticities has been calculated by the model.

2: With Costs [Under Development]
This now introduces costs, both fixed and variable in nature, so that trainees can now see how not only revenue but also profit responds to changes in price.

3: With Competition [Under Development]
This now goes a stage further and introduces competition into the equation. Now changes made by one trainee to their price plans will have an impact on the customer bases of all of the other trainees. This will allow trainees to 'war game' against each other, to help illustrate, for example, how companies might be expected to react to significant changes in price introduced by one company in the market (perhaps wishing to grow its market share aggressively).