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Duopoly pricing of software products under free strategy: Limited-feature vs. seeding.

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Title: Duopoly pricing of software products under free strategy: Limited-feature vs. seeding.
Authors: Nan, Guofang1 gfnan@tju.edu.cn, Shi, Feihong1 feihongsfh@tju.edu.cn, Dou, Runliang1 drl@tju.edu.cn, Li, Minqiang1 mqli@tju.edu.cn
Source: Computers & Industrial Engineering. Oct2016, Vol. 100, p13-23. 11p.
Subjects: Economic policy, Computer software costs, Computer software sales & prices, Sowing, Consumers
Abstract: Adopting free strategy in competitive settings is pervasive in the software market. However, previous studies on free trial pay more attention to monopoly case rather than duopoly case. This paper examines the duopoly case in which one firm adopts the limited-feature free trial strategy and the other employs the seeding strategy. We drive the equilibrium prices and profits of two firms, and explore how the optimal prices and profits are affected by the quality and the service level of free trial version, the network intensity and the seeding ratio. We find that the firm adopting the limited-feature free trial strategy is profitable to provide free trial version of its commercial software with lower quality and better service, and the firm which uses seeding strategy may seed more potential consumers to obtain more profit. We discover the impact of the network intensity is negative on the profit of the firm that adopts the limited-feature free strategy. This result is different from the previous literature on limited-feature free trial in monopoly case. Moreover, the firm which employs seeding strategy prefers higher seeding ratio and stronger network intensity. [ABSTRACT FROM AUTHOR]
Copyright of Computers & Industrial Engineering is the property of Pergamon Press - An Imprint of Elsevier Science and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)
Database: Engineering Source
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DbLabel: Engineering Source
An: 118076129
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PubTypeId: academicJournal
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  Data: <searchLink fieldCode="DE" term="%22Economic+policy%22">Economic policy</searchLink><br /><searchLink fieldCode="DE" term="%22Computer+software+costs%22">Computer software costs</searchLink><br /><searchLink fieldCode="DE" term="%22Computer+software+sales+%26+prices%22">Computer software sales & prices</searchLink><br /><searchLink fieldCode="DE" term="%22Sowing%22">Sowing</searchLink><br /><searchLink fieldCode="DE" term="%22Consumers%22">Consumers</searchLink>
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  Data: Adopting free strategy in competitive settings is pervasive in the software market. However, previous studies on free trial pay more attention to monopoly case rather than duopoly case. This paper examines the duopoly case in which one firm adopts the limited-feature free trial strategy and the other employs the seeding strategy. We drive the equilibrium prices and profits of two firms, and explore how the optimal prices and profits are affected by the quality and the service level of free trial version, the network intensity and the seeding ratio. We find that the firm adopting the limited-feature free trial strategy is profitable to provide free trial version of its commercial software with lower quality and better service, and the firm which uses seeding strategy may seed more potential consumers to obtain more profit. We discover the impact of the network intensity is negative on the profit of the firm that adopts the limited-feature free strategy. This result is different from the previous literature on limited-feature free trial in monopoly case. Moreover, the firm which employs seeding strategy prefers higher seeding ratio and stronger network intensity. [ABSTRACT FROM AUTHOR]
– Name: AbstractSuppliedCopyright
  Label:
  Group: Ab
  Data: <i>Copyright of Computers & Industrial Engineering is the property of Pergamon Press - An Imprint of Elsevier Science and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.)
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RecordInfo BibRecord:
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      – Type: doi
        Value: 10.1016/j.cie.2016.07.026
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      – Code: eng
        Text: English
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        PageCount: 11
        StartPage: 13
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      – SubjectFull: Economic policy
        Type: general
      – SubjectFull: Computer software costs
        Type: general
      – SubjectFull: Computer software sales & prices
        Type: general
      – SubjectFull: Sowing
        Type: general
      – SubjectFull: Consumers
        Type: general
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      – TitleFull: Duopoly pricing of software products under free strategy: Limited-feature vs. seeding.
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            NameFull: Nan, Guofang
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            NameFull: Shi, Feihong
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            NameFull: Dou, Runliang
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            NameFull: Li, Minqiang
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            – D: 01
              M: 10
              Text: Oct2016
              Type: published
              Y: 2016
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              Value: 100
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