Customer is King? A Framework to Shift from Cost- to Value-Based Pricing in Software as a Service: The Case of Business Intelligence Software

Abstract

HAL is a multidisciplinary open access archive for the deposit and dissemination of scientific research documents, whether they are published or not. The documents may come from teaching and research institutions in France or abroad, or from public or private research centers. L'archive ouverte pluridisciplinaire HAL, est destinée au dépôt et à la diffusion de documents scientifiques de niveau recherche, publiés ou non, émanant des établissements d'enseignement et de recherche français ou étrangers, des laboratoires publics ou privés.

Pricing of Digital Innovations as an Entrepreneurial Process

“…Their pricing was based on a subscription fee that was largely dependent on the value of the digital innovation for the customers. This finding is in line with earlier studies focusing on different types of digital innovations [35,37,38]. However, in this study, we go beyond these general findings on different pricing models and strategies to reveal the actions and resources that entrepreneurs need when pricing digital innovations.…”

“…[17,18]) that is closely related to the resources that entrepreneurs possess. This entrepreneurship aspect has been largely absent in the previous pricing literature on digital innovations [14,15,16,17,18,35].…”

“…Based on this information, entrepreneurs might apply cost-based, value-based, competition-oriented, performance-based pricing, or some combination of these [30,31,32,33,34]. First, even though the cost aspects cannot be fully neglected when pricing digital innovations, due to their special cost structure, their pricing cannot be based solely on cost because the cost determines the volume of profitable operations and not the price [35,36]. In contrast, variable cost factors (e.g., hosting and maintenance costs and costs related to improving the quality of service) are often taken into account in pricing digital innovations [6].…”