This paper develops an analytical model to preferred pricing time paths of a portfolio of seed products, which simultaneously addresses the goals of encouraging adoption and maximizing a firm's returns within a competitive environment while considering a shorter life cycle. The seed portfolio consists of an existing seed (i.e. hybrid corn) and a biotechnology-derived seed (i.e. herbicide resistant corn).

To address this objective, a dynamic optimal pricing model is selected because of its flexibility in identifying an optimal decision under a range of conditions through parametric variation of state variables. In addition, the DP algorithm searches for the best price vector within a set of min-max range. This pricing model considers the effects of market share, supply elasticity, shorter life cycle, and the substitution effect between herbicide resistant corn seed and herbicide chemicals. The use of herbicide resistant corn seed allows farmers to reduce input costs by applying less herbicide chemicals. However, herbicide producers are not willing to stand by idly as their markets are invaded. Thus, their competitive reactions may alter the pricing strategy. This paper considers this form of competition to trace the pricing strategy of a seed firm supplying a portfolio of seeds.

The preliminary results indicate that a seed firm that supplies an existing seed and a biotechnology-derived seed in the same market should consider the substitution effect, output price effect, and market share when setting pricing strategy. The preferred pricing strategy also depends on the remaining product life expected. The pricing strategies are different for shorter and longer planning horizons.