Optimal pricing strategies for Internet-based software dissemination

H. Gurnani, K. Karlapalem

Research output: Contribution to journalArticle

19 Citations (Scopus)

Abstract

In the recent past, there have been several initiatives by major software companies, such as Microsoft, to lead the industry towards electronic software distribution. In this paper, we use a monopoly pricing model to examine the optimal pricing strategies for `selling' and `pay-per-use' licensing of packaged software over the Internet. Traditionally, software distribution included outfight sale as well as short/long term renting. With the Internet fast becoming a prevalent mode for disseminating software, a customer can download and use software on a need-by-need basis. For the software vendor, offering the pay-per-use option to the consumer provides for a steady source of revenue and obviates the need for physical distribution, purchasing and inventory management mishaps. We examine the following issues in this paper: (i) what are the extra benefits to the software vendor for providing the pay-per-use option?; and (ii) does the market size change? The contribution of this paper is to show that pay-per-use is a viable alternative for a large number of customers, and that judicious pricing for pay-per-use is profitable for the software vendor.

Original languageEnglish (US)
Pages (from-to)64-70
Number of pages7
JournalJournal of the Operational Research Society
Volume52
Issue number1
StatePublished - Jan 2001
Externally publishedYes

Fingerprint

Internet
Sales
Costs
Electronics industry
Purchasing
Software
World Wide Web
Pricing strategy
Optimal pricing
Dissemination
Industry
Vendors

ASJC Scopus subject areas

  • Management of Technology and Innovation
  • Strategy and Management
  • Management Science and Operations Research

Cite this

Optimal pricing strategies for Internet-based software dissemination. / Gurnani, H.; Karlapalem, K.

In: Journal of the Operational Research Society, Vol. 52, No. 1, 01.2001, p. 64-70.

Research output: Contribution to journalArticle

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