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 language | English (US) |
|---|---|
| Pages (from-to) | 64-70 |
| Number of pages | 7 |
| Journal | Journal of the Operational Research Society |
| Volume | 52 |
| Issue number | 1 |
| State | Published - Jan 2001 |
| Externally published | Yes |
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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 journal › Article
}
TY - JOUR
T1 - Optimal pricing strategies for Internet-based software dissemination
AU - Gurnani, H.
AU - Karlapalem, K.
PY - 2001/1
Y1 - 2001/1
N2 - 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.
AB - 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.
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M3 - Article
AN - SCOPUS:0034826064
VL - 52
SP - 64
EP - 70
JO - Journal of the Operational Research Society
JF - Journal of the Operational Research Society
SN - 0160-5682
IS - 1
ER -