The Pricing Strategy Analysis for the Software-as-a-Service Business Model

The Software-as-a-Service (SaaS) model is a novel way of delivering software applications. In this paper, we present an analytical model to study the competition between the SaaS and the traditional COTS (Commercial off-the-shelf) software. The main research goal is to analyze the pricing strategy o...

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Main Authors: MA, Dan, SEIDMANN, Abraham
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2008
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Online Access:https://ink.library.smu.edu.sg/sis_research/245
https://ink.library.smu.edu.sg/context/sis_research/article/1244/viewcontent/PricingStrategy_SaaA_2008_afv.pdf
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spelling sg-smu-ink.sis_research-12442018-03-14T08:19:53Z The Pricing Strategy Analysis for the Software-as-a-Service Business Model MA, Dan SEIDMANN, Abraham The Software-as-a-Service (SaaS) model is a novel way of delivering software applications. In this paper, we present an analytical model to study the competition between the SaaS and the traditional COTS (Commercial off-the-shelf) software. The main research goal is to analyze the pricing strategy of the SaaS in a competitive setting. The model captures the most salient differences between the SaaS and COTS, including their distinct pricing structures, user initial setup costs, system customization levels, and delivery channels. We find that the two could coexist in a competitive market in the long run, and more importantly, we show how the SaaS could gradually take over the whole market even when its quality is inferior. Surprisingly, our analysis shows that the SaaS should raise (reduce) its prices when its software quality declines (increases) over time (in the relative sense). 2008-08-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/sis_research/245 info:doi/10.1007/978-3-540-85485-2_8 https://ink.library.smu.edu.sg/context/sis_research/article/1244/viewcontent/PricingStrategy_SaaA_2008_afv.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Computing and Information Systems eng Institutional Knowledge at Singapore Management University SaaS business model pricing strategy competition COTS software Computer Sciences Management Information Systems
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic SaaS business model
pricing strategy
competition
COTS software
Computer Sciences
Management Information Systems
spellingShingle SaaS business model
pricing strategy
competition
COTS software
Computer Sciences
Management Information Systems
MA, Dan
SEIDMANN, Abraham
The Pricing Strategy Analysis for the Software-as-a-Service Business Model
description The Software-as-a-Service (SaaS) model is a novel way of delivering software applications. In this paper, we present an analytical model to study the competition between the SaaS and the traditional COTS (Commercial off-the-shelf) software. The main research goal is to analyze the pricing strategy of the SaaS in a competitive setting. The model captures the most salient differences between the SaaS and COTS, including their distinct pricing structures, user initial setup costs, system customization levels, and delivery channels. We find that the two could coexist in a competitive market in the long run, and more importantly, we show how the SaaS could gradually take over the whole market even when its quality is inferior. Surprisingly, our analysis shows that the SaaS should raise (reduce) its prices when its software quality declines (increases) over time (in the relative sense).
format text
author MA, Dan
SEIDMANN, Abraham
author_facet MA, Dan
SEIDMANN, Abraham
author_sort MA, Dan
title The Pricing Strategy Analysis for the Software-as-a-Service Business Model
title_short The Pricing Strategy Analysis for the Software-as-a-Service Business Model
title_full The Pricing Strategy Analysis for the Software-as-a-Service Business Model
title_fullStr The Pricing Strategy Analysis for the Software-as-a-Service Business Model
title_full_unstemmed The Pricing Strategy Analysis for the Software-as-a-Service Business Model
title_sort pricing strategy analysis for the software-as-a-service business model
publisher Institutional Knowledge at Singapore Management University
publishDate 2008
url https://ink.library.smu.edu.sg/sis_research/245
https://ink.library.smu.edu.sg/context/sis_research/article/1244/viewcontent/PricingStrategy_SaaA_2008_afv.pdf
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