MTAT.03.244 Software Economics Lecture 9: Software Pricing

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Fixed-fee Pricing (cont.)

• Limitations of fixed-price

– Does not take into account customization / assumes

all customers are the same

– Does not capture consumer surplus (good and bad)

• Leads to price discrimination…

Optimization: Gradient and steepest descent

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• Flat perpetual fee • Flat periodic fee Fixed-fee Pricing • When to choose which? • What price should we charge? – Depends on the cost, • Fixed cost • Variable cost (e.g. support) • Maintenance cost! – But also on the demand curve, see example at: http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html 6

Fixed-fee Pricing (cont.) • Limitations of fixed-price – Does not take into account customization / assumes all customers are the same – Does not capture consumer surplus (good and bad) • Leads to price discrimination… 7

Page 1 and 2: MTAT.03.244 Software Economics Lect
Page 3 and 4: Information Goods • IT products h
Page 5: Pricing Strategies for Information
Page 9 and 10: Price Discrimination (cont.) • Th
Page 11 and 12: Other Factors Affecting Software Pr
Page 13 and 14: Nuway Software Case • Nuway is a
Page 15: Further Reading • Paper by Hal Va

MTAT.03.244 Software Economics Lecture 9: Software Pricing

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