Cost and pricing principles for service configurators Matti Sievänen a, Mikko Heiskala b , & Juha Tiihonen b Tampere University of Technology a Aalto University b Abstract Mass customization has been introduced as a fast and cost effective way to offer personalized products to customers. Mass customization requires three capabilities; a stable solution space, a robust process design, and choice navigation support. Our interest lies in the last one, choice navigation support and in a special case of services. The aim of the paper is to study how pricing and cost information can be combined into conceptual model for mass customizable services. To do this we have picked one model, Four‐Words Model, as an example to show how the model could be extended. The results show that pricing model has to be combined with sales configuration model. Moreover, cost model is combined with technical configuration model. Because the service object affects the service process both price and cost information has to be presented as a conditional attribute, simple addition of prices or costs is not adequate.. Keywords: Mass customization, service, configuration, pricing model, cost model Introduction Many customers are no longer content with standard offerings. Instead, they demand solutions that are customized to their needs. On the other hand, they are not willing to wait long for delivery. In addition to this customization‐responsiveness squeeze (McCutcheon, Raturi, & Meredith, 1994), customers tend to require affordable prices. Thus, companies are squeezed between demand for customization and the pressures it puts on the efficiency and profitability of the operation. Mass customization has been proposed as an approach to address the squeeze. Successful mass customization requires three capabilities (Salvador, de Holan, & Piller, 2009). First, a stable solution space consisting of modules or components that can be mixed and matched in response to individual customer requests. Second, a robust process design capable of delivering the customized solutions efficiently. Finally, choice navigation support for customers to enable them to identify the most suitable combination of modules to their needs while minimizing complexity and the burden of choosing from potentially numerous options. To improve the choice navigation capabilities of companies, dedicated IT system support ‐ configurators ‐have been researched, developed, and applied, (see e.g. Sabin & Weigel, 1998). Configurators help in the definition of a sales specification that can be produced, and subsequently translated into the required parts and production information. For configurator support, any required information has to be modeled and entered into the configurator. Usually, the modeling utilizes a conceptual model describing the concepts and their relationships that are deemed necessary to capture the phenomena of interest. There are several such configuration conceptual models for goods but they rarely consider pricing or cost information. Yet, customers