Pricing and upgrade strategies for software vendors in the software-As-A-service market

Charles Zhechao Liu, Yoris A. Au, Emmanuel Ayaburi

Research output: Contribution to book or proceedingConference articlepeer-review

1 Scopus citations

Abstract

This study examines the competition between an independent software vendor (ISV) who offers a standard fixed-price software product and a cloud software vendor (CSV) who adopts a usage-based linear pricing scheme for its cloud-based software. Using a game theoretic approach, we set up a duopoly model to derive the optimal pricing and product feature choice decisions for both the ISV and the CSV in a market characterized with heterogeneous consumer preferences for software features, and different risk structures. Next, we plan to extend the duopoly model into a two-stage game and examine how the equilibrium outcomes change when we allow both vendors to exercise their software upgrade strategies. The results of our study will provide important implications to vendors and consumers in software markets where the Software-As-A- Service (SaaS) business model began to prevail and contribute to the growing literature on economics of cloud computing.

Original languageEnglish
Title of host publication2015 International Conference on Information Systems
Subtitle of host publicationExploring the Information Frontier, ICIS 2015
PublisherAssociation for Information Systems
ISBN (Print)9780996683111
StatePublished - 2015
Event2015 International Conference on Information Systems: Exploring the Information Frontier, ICIS 2015 - Fort Worth, United States
Duration: Dec 13 2015Dec 16 2015

Publication series

Name2015 International Conference on Information Systems: Exploring the Information Frontier, ICIS 2015

Conference

Conference2015 International Conference on Information Systems: Exploring the Information Frontier, ICIS 2015
Country/TerritoryUnited States
CityFort Worth
Period12/13/1512/16/15

Keywords

  • Cloud computing
  • Economics of information systems
  • Game theory
  • Price analysis
  • SaaS
  • Software-As-A-Service

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