Volvo Cars

Consulting, 01/2021β€”05/2021, Berkeley, CA

In spring of 2021, I worked with a Voyager Consulting team to provide pricing recommendations to Volvo Cars. We studied on-demand car features (ODCFs), premium features that could be built into the car and activated post-market. The subscription pricing model is a new revenue stream for car manufacturers and is already adopted by Audi, BMW, Cadillac, Porsche, and Tesla. Our project involved scoping out leading ODCFs, assessing consumer price sensitivity, and implementing a break-even model.

We compiled 36 potential subscription features, spanning from heated seats to auto-pilot. We designed a novel pricing survey inspired by binary searches and Gabor-Granger pricing in which survey takers go through 5 β€œrounds” of price polling for each feature, converging exponentially on specific price. I implemented the survey with JavaScript logic in Qualtrics, later recieving 2,500 responses from Volvo customers.

We then built a pricing model in R Shiny with the ability to consider economies of scale. With two price points for inputs, the model extrapolates further savings from scale with a linear model. The result was a flexible, easy-to-use application available online.