Comfort and Security, But at What Cost? : A Study Using a Metric – Based Conjoint Analysis to Estimate the Willingness to Pay for Bundled Smart Home Technology

Abstract: The presence of Smart Technology is becoming more prevalent in our homes with the rise of the Internet of Things. Although this technology is said to ease everyday chores and make our homes safer, the adoption has been slower than first anticipated by researchers. Studies have shown that the relatively low diffusion of this technology can, to some extent, be explained by cost barriers, technology anxiety, lack of technical ‘know-how’ and the perceived risks associated with a digital upgrade. However, there is surprisingly limited information on homeowners’ willingness to pay for Smart Home Technology (SHT) and, in particular, comfort and security appliances currently on offer on the market. This thesis aims to fill that gap and create a broader understanding of what attributes respondents value when making a purchasing decision. By applying a metric-based conjoint analysis model to primary data collected through a web-based survey, sent to condominium owners in Sweden, the authors of this study show what the optimal Smart Home bundle should comprise of, and how much homeowners are willing to pay. The results show that there is a willingness to adopt premium articles currently on offer on the market although, the willingness to pay for these solutions are relatively low. Moreover, although consumer make a trade-off between different attributes when making a purchasing decision, this study shows that price heavily outweighs other attributes in the case of comfort and security SHTs. A cluster analysis also showed a difference of preferences within the sample set, indicating that companies aiming to sell bundled SHTs should offer a variety of bundles to account for different consumer needs and perceived uses. Additionally, SHT bundles should be complemented with additional services that distinguish the products from other appliances sold on the market.