An emerging business model increasingly used by companies in the online software market is to provide both a free basic version and a paid premium version for a service or a product to customers. Such a setting is oft...An emerging business model increasingly used by companies in the online software market is to provide both a free basic version and a paid premium version for a service or a product to customers. Such a setting is often called freemium model. The existence of the free version can reduce the customer uncertainty regarding the evaluation of the commercial software and make use of network effect to improve the firm＇s profit. However, the freemium model may also have the cannibalization effect which can hurt the profit. Hence, the from needs to determine the optimal content for the free version and the optimal price for the premium version to maximize its profit. In this paper, thst, we obtain the optimal decisions of the freemium model and their properties. Second, we compare the freemium model with the traditional charge-for-everything model that all content of the product need to be charged in terms of the profit, customer welfare, and social welfare. The results show that when customer underestimates the value of the software significantly and the true value of the software is high enough, the freemium model can generate higher profit, higher customer welfare, and higher social welfare. Otherwise, the freemium model may not deliver the desired results.展开更多
The freemium pricing model has become mainstream in the software industry.A large user base can induce positive network effects while expanding security risks associated with unpatched users.This study explores a two-...The freemium pricing model has become mainstream in the software industry.A large user base can induce positive network effects while expanding security risks associated with unpatched users.This study explores a two-stage decision problem faced by software vendors that involves a freemium versioning strategy and a subsequent security-patching strategy when taking both the positive network externality and negative security externality into consideration.It is noteworthy that a joint effect of the two externalities on the vendor’s management decisions exists.First,we analytically derive three patching strategies for the vendor:PS_(1)(rebates all users),PS_(2)(rebates only freeware users),and PS_(3)(rebates no users).Our results indicate that,if the strength of the positive network externality is relatively low,the optimal security-patching strategy will be significantly affected by the negative security externality.Specifically,when the intensity of the negative security externality is low,the vendor’s optimal patching strategy will be PS_(1).However,with the increase in the negative security externality,the optimal patching strategy changes to PS_(2) and then to PS_(3),whereas the strategy spaces of PS_(1) and PS_(2) decrease in the positive network externality to zero.Nevertheless,if the strength of the positive network externality is relatively high,the vendor is better off selecting PS_(1) when the negative security externality is low.However,when the negative security externality is high,PS_(3) is optimal.Furthermore,based on optimal patching strategies,we reveal the optimal conditions required for the vendor to adopt the freemium model compared with commercial only.Of interest,we find that the vendor adopting the freemium version is also influenced by the interaction of the two externalities.Finally,through numerical experiments,we find that the vendor and social planner’s interests can be aligned under certain conditions.However,this is not always the case.展开更多
Microtransactions denote a payment made for purchase of mobile phone application or additional content in video games.The basic revenue principle for publisher was to sell the entire content at once,with the buyer hav...Microtransactions denote a payment made for purchase of mobile phone application or additional content in video games.The basic revenue principle for publisher was to sell the entire content at once,with the buyer having to pay the game as a whole.Trends from mobile applications and mobile games market have slowly transferred to PC games and console video games.About one half of total revenue of big video games publishers comes from microtransactions.The topics of this paper are the economic effects of microtransactions on video game industry business model.The scope of microtransactions and different implementing procedures will be discused in paper.The goal is to determine the change of the position of all stakeholders involved in the process of creating and publishing video games.展开更多
产品的网络效应特性是产品定价决策的重要因素,免费增值是企业利用产品网络效应的重要手段.本文考虑基础产品和服务均存在正网络效应的情况下,多种服务在分别售卖和捆绑售卖(VIP模式)下的最优定价、最优市场份额和最大收益.基于multinom...产品的网络效应特性是产品定价决策的重要因素,免费增值是企业利用产品网络效应的重要手段.本文考虑基础产品和服务均存在正网络效应的情况下,多种服务在分别售卖和捆绑售卖(VIP模式)下的最优定价、最优市场份额和最大收益.基于multinominal logit model (MNL)模型,构建了免费增值模式下服务产品的最优定价与策略选择优化模型,理论分析了分别售卖和捆绑售卖下的最优解和利润差异.研究表明,受正网络效应影响,在一定范围内,得到了产品服务的最优定价、最优市场份额和最大收益的理论解;最后,数值仿真表明产品进入市场初期捆绑售卖模式最优,选择异质产品分别售卖将是最优策略.研究成果可以为平台信息类产品服务的定价策略提供理论依据和决策支持.展开更多
文摘An emerging business model increasingly used by companies in the online software market is to provide both a free basic version and a paid premium version for a service or a product to customers. Such a setting is often called freemium model. The existence of the free version can reduce the customer uncertainty regarding the evaluation of the commercial software and make use of network effect to improve the firm＇s profit. However, the freemium model may also have the cannibalization effect which can hurt the profit. Hence, the from needs to determine the optimal content for the free version and the optimal price for the premium version to maximize its profit. In this paper, thst, we obtain the optimal decisions of the freemium model and their properties. Second, we compare the freemium model with the traditional charge-for-everything model that all content of the product need to be charged in terms of the profit, customer welfare, and social welfare. The results show that when customer underestimates the value of the software significantly and the true value of the software is high enough, the freemium model can generate higher profit, higher customer welfare, and higher social welfare. Otherwise, the freemium model may not deliver the desired results.
文摘The freemium pricing model has become mainstream in the software industry.A large user base can induce positive network effects while expanding security risks associated with unpatched users.This study explores a two-stage decision problem faced by software vendors that involves a freemium versioning strategy and a subsequent security-patching strategy when taking both the positive network externality and negative security externality into consideration.It is noteworthy that a joint effect of the two externalities on the vendor’s management decisions exists.First,we analytically derive three patching strategies for the vendor:PS_(1)(rebates all users),PS_(2)(rebates only freeware users),and PS_(3)(rebates no users).Our results indicate that,if the strength of the positive network externality is relatively low,the optimal security-patching strategy will be significantly affected by the negative security externality.Specifically,when the intensity of the negative security externality is low,the vendor’s optimal patching strategy will be PS_(1).However,with the increase in the negative security externality,the optimal patching strategy changes to PS_(2) and then to PS_(3),whereas the strategy spaces of PS_(1) and PS_(2) decrease in the positive network externality to zero.Nevertheless,if the strength of the positive network externality is relatively high,the vendor is better off selecting PS_(1) when the negative security externality is low.However,when the negative security externality is high,PS_(3) is optimal.Furthermore,based on optimal patching strategies,we reveal the optimal conditions required for the vendor to adopt the freemium model compared with commercial only.Of interest,we find that the vendor adopting the freemium version is also influenced by the interaction of the two externalities.Finally,through numerical experiments,we find that the vendor and social planner’s interests can be aligned under certain conditions.However,this is not always the case.
文摘Microtransactions denote a payment made for purchase of mobile phone application or additional content in video games.The basic revenue principle for publisher was to sell the entire content at once,with the buyer having to pay the game as a whole.Trends from mobile applications and mobile games market have slowly transferred to PC games and console video games.About one half of total revenue of big video games publishers comes from microtransactions.The topics of this paper are the economic effects of microtransactions on video game industry business model.The scope of microtransactions and different implementing procedures will be discused in paper.The goal is to determine the change of the position of all stakeholders involved in the process of creating and publishing video games.
文摘产品的网络效应特性是产品定价决策的重要因素,免费增值是企业利用产品网络效应的重要手段.本文考虑基础产品和服务均存在正网络效应的情况下,多种服务在分别售卖和捆绑售卖(VIP模式)下的最优定价、最优市场份额和最大收益.基于multinominal logit model (MNL)模型,构建了免费增值模式下服务产品的最优定价与策略选择优化模型,理论分析了分别售卖和捆绑售卖下的最优解和利润差异.研究表明,受正网络效应影响,在一定范围内,得到了产品服务的最优定价、最优市场份额和最大收益的理论解;最后,数值仿真表明产品进入市场初期捆绑售卖模式最优,选择异质产品分别售卖将是最优策略.研究成果可以为平台信息类产品服务的定价策略提供理论依据和决策支持.
