Pricing Information Goods: A Strategic Analysis of the Selling and Pay-per-Use Mechanisms

• Main Authors: Balasubramanian, Sridhar, BHATTACHARYA, Shantanu, Krishnan, Vish V.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2015
• Subjects: information goods; competitive strategy; pricing; digital marketing; game theory; Marketing; Operations and Supply Chain Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/4918; https://ink.library.smu.edu.sg/context/lkcsb_research/article/5917/viewcontent/PricingInfoGoodsStrategic_2012_pp.pdf
• Institution: Singapore Management University

We analyze two pricing mechanisms for information goods. These mechanisms are selling, where up-front payment allows unrestricted use, and pay-per-use, where payments are tailored to use. We analytically model a market where consumers differ in use frequency and where use on a pay-per-use basis invo...