Information rules: a strategic guide to the network economy
Information rules: a strategic guide to the network economy
Simulation Modeling and Analysis
Simulation Modeling and Analysis
Computer Methods for Mathematical Computations
Computer Methods for Mathematical Computations
The optimal software licensing policy under quality uncertainty
ICEC '03 Proceedings of the 5th international conference on Electronic commerce
Nonlinear Pricing of Information Goods
Management Science
Determining the Proper Number and Price of Software Licenses
IEEE Transactions on Software Engineering
The changing labyrinth of software pricing
Communications of the ACM - Creating a science of games
Comparison of Software Quality Under Perpetual Licensing and Software as a Service
Journal of Management Information Systems
The Pricing Strategy Guideline Framework for SaaS Vendors
International Journal of Strategic Information Technology and Applications
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This paper develops an economic model to compare the profitability of two strategies for the pricing of packaged software: fixed-fee and pay-per-use licensing. It is assumed that the market consists of a monopoly software vendor who is selling packaged software to customers who are homogeneous in marginal value of software use but heterogeneous in level of use. In addition to obtaining the software package from the market, customers can develop the required software in-house. When in-house development costs are constant across customers, the results show that the software vendor prefers pay-per-use licensing over fixed-fee licensing if in-house development is relatively expensive, whereas fixed-fee licensing is optimal if the cost of in-house development drops below a certain threshold value. When the assumption of a constant in-house development cost is relaxed by letting it vary among customers, it still holds that pay-per-use licensing is optimal if its average is relatively large. For low and medium values of the average cost of in-house development, however, fixed-fee licensing may no longer be optimal as the relative attractiveness of the two licensing strategies now depends on how dispersed the in-house development costs of individual customers are.