Abstract: The rapid upgrading of innovative products requires that pricing strategies for successive generations account for the sales impact of previous generations. Based on the generalized Norton-Bass (GNB) model for successive product demand, this study incorporates factors such as production capacity and consumer behavior to develop a decision model that offers a better representation of real-world decision problems. Furthermore, dynamic pricing strategies are explored to maximize the total profit of multi-generation products. Given that traditional mathematical modeling approaches are difficult to solve this complicated pricing problem, a system dynamics model is established. Then, this challenging problem is solved by a simulation-based optimization method. Results not only explain the pricing strategies adopted by leading innovative enterprises in the smartphone industry, but also quantify the effects of capacity constraints and discount timing on the launch prices and discount prices of both product generations. Moreover, the positive impact of word-of-mouth spreading on sales and profit of multi-generation products are quantified. From the perspective of consumer behavior, the study also evaluates the influence of marketing effort in word-of-mouth promotion on the dynamic pricing of successive product generations.