The evolution of software pricing: from box licenses to application service provider models

The evolution of software pricing: from box licenses to application service provider models Software is the intellectual capital output of the codified knowledge of a programming team. The development cost is high, but the variable cost of sale is substantially lower (negligible) than for hard goods. Unfortunately, there does not exist a valid or reliable measure to value software. The trend has been to align pricing to the activities that buyers realize value from. However, new architectures change the nature of where value is realized and how service becomes part of the equation. There does not exist a perfect generic pricing model. Vendors must understand the value they provide to their customers and create a price structure that aligns pricing with value realization, but more importantly facilitates their business objectives of the product (and service). http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Internet Research Emerald Publishing

The evolution of software pricing: from box licenses to application service provider models

Internet Research, Volume 10 (3): 10 – Aug 1, 2000

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Publisher
Emerald Publishing
Copyright
Copyright © 2000 MCB UP Ltd. All rights reserved.
ISSN
1066-2243
DOI
10.1108/10662240010331993
Publisher site
See Article on Publisher Site

Abstract

Software is the intellectual capital output of the codified knowledge of a programming team. The development cost is high, but the variable cost of sale is substantially lower (negligible) than for hard goods. Unfortunately, there does not exist a valid or reliable measure to value software. The trend has been to align pricing to the activities that buyers realize value from. However, new architectures change the nature of where value is realized and how service becomes part of the equation. There does not exist a perfect generic pricing model. Vendors must understand the value they provide to their customers and create a price structure that aligns pricing with value realization, but more importantly facilitates their business objectives of the product (and service).

Journal

Internet ResearchEmerald Publishing

Published: Aug 1, 2000

Keywords: Computer sofware; Pricing; Intellectual capital; Telecommunications; Human resource management systems

References

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