Software as Service Pricing: a Game Theory Perspective

Author

Tian, Chunhua ; Zheng, Yan ; Jiang, Zhongbo ; Cao, RongZeng ; Sun, Wei ; Ding, Wei

Author_Institution

IBM China Res. Lab., Beijing

fYear

2006

fDate

21-23 June 2006

Firstpage

215

Lastpage

218

Abstract

Software as service (SaS) is an emerging business model for software sales and distribution. How pricing mechanism changed under such new business model is analyzed in this paper with principle-agent model. The analysis shows that cost structure and externality are two key differences between product and service pricing. Due to low marginal cost of SaS, consumers´ affordability became a key determinant in SaS pricing. There may be free even pay-for-consuming service if externality is large enough. Consumer heterogeneity is also a key factor in software pricing. But numeric experiments show that the impact is heavily dependent on consumer type distribution

Keywords

commerce; consumer behaviour; game theory; pricing; statistical distributions; business model; consumer heterogeneity; consumer type distribution; cost structure; game theory; pay-for-consuming service; principle-agent model; product pricing; service pricing; software pricing; Application software; Authorization; Costs; Game theory; Investments; Marketing and sales; Middleware; Pricing; Sun; Web services; Consumer Heterogeneity; Game Theory; Pricing; SaS (Software as Service);

fLanguage

English

Publisher

ieee

Conference_Titel

Service Operations and Logistics, and Informatics, 2006. SOLI '06. IEEE International Conference on

Conference_Location

Shanghai

Print_ISBN

1-4244-0317-0

Electronic_ISBN

1-4244-0318-9

Type

conf

DOI

10.1109/SOLI.2006.328919

Filename

4125580