The Influence of Software Process Maturity and Customer Error Reporting on Software Release and Pricing

August, Terrence; Niculescu, Marius

doi:10.1287/mnsc.2013.1728

Cited by 21 publications

(4 citation statements)

References 46 publications

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“…Gupta et al (2011) studied investment incentives for network infrastructure owners under different pricing strategies. August and Niculescu (2013) examined how a software firm optimally determines its pricing in a setting where it can harness customer error reporting. Sellers' other strategies, such as the introduction of product upgrades (Ji et al 2011, Mehra et al 2014 and introduction of agency model for digital goods Carrillo 2017, Tan et al 2016), have also been considered in the literature.…”

Section: Introductionmentioning

confidence: 99%

Pricing Strategies under Behavioral Observational Learning in Social Networks

Qiu

Whinston

2017

Production and Operations Management

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The increasing pervasiveness of social networks allows users to share purchase behaviors with their online friends. In this study, we examine optimal pricing strategies of a monopolistic firm using an analytical model that accounts for behavioral observational learning in social networks. We show that a seller could potentially control the information available to future customers and induce behavioral observational learning, using an information‐revealing pricing strategy. This result suggests that offering introductory discounts is not always an effective method to boost purchases in social networks. It could prevent the behavioral observational learning that would increase future customers' willingness to pay.

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Section: Introductionmentioning

confidence: 99%

Pricing Strategies under Behavioral Observational Learning in Social Networks

Qiu

Whinston

2017

Production and Operations Management

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“…The product development literature also talks about how involving prospective consumers early on in the development can benefit or hurt firm interest (Hoyer et al 2010). August and Niculescu (2013) study the impact of the size of the beta testing group on the timing of the product release and the quality of the product.…”

Section: Public Betamentioning

confidence: 99%

“…2010). August and Niculescu (2013) study the impact of the size of the beta testing group on the timing of the product release and the quality of the product.…”

Section: Literature Reviewmentioning

confidence: 99%

Utilizing Public Betas and Free Trials to Launch a Software Product

Mehra

Saha

2018

Production and Operations Management

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Many software product firms release a public beta prior to launching its product. Public betas are adopted by innovator consumers and firms use free feedback from these consumers to improve the quality of the product. While trying out the public beta, innovators also learn their product preferences accurately. In addition, opinions expressed by the innovators about the software on public forums like blogs, etc., can introduce a perception bias about the product's quality among the imitator consumers. Therefore, there are demand and cost side tradeoffs in introducing public betas. In addition to public beta, firms can introduce product trials along with the product. Product trials serve as a learning mechanism for all consumers (innovators and imitators), unlike in the case of public betas where this benefit accrues only to innovators. We examine the firm's optimal strategies to introduce public beta and/or product trial. We show that introducing public beta does not necessarily result in a higher‐quality product. However, even when the quality is lower, consumer surplus and social welfare can be higher. Interestingly, while introducing public beta in addition to trial may appear to be optimal, it may not always be so. We show that similar results hold for products with network effects. We also find that even though the marginal value of quality to consumers is higher for products with network effects, the quality of the product can sometimes be lower than the quality in absence of network effects.

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“…While this research considers the reliability‐related benefit of beta testing, it ignores the market‐related benefits resulting from word‐of‐mouth and network effects associated with public beta testing. In a more recent study that examines the impact of software process maturity and customer error reporting on software release policy, August and Niculescu () find that with a high process maturity and a high quality product, a software firm should delay the release of its product as the size of beta test increases. Their study does not attempt to derive an optimal number of beta testers or an optimal duration of beta testing.…”

Section: Introductionmentioning

confidence: 99%

The Economics of Public Beta Testing

et al. 2016

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A growing number of software firms now rely on public beta testing to improve the quality of their products before commercial release. While the benefits resulting from improved software reliability are well recognized, some important market‐related benefits have not been studied. Through word‐of‐mouth, public beta testers can accelerate the diffusion of a software product after its release. Additionally, because of network effects, public beta testers can increase users’ valuation of a product. In this study, we consider both reliability‐related and market‐related benefits, and develop models to determine the optimal number of public beta testers and the optimal duration of testing. Our analyses show that public beta testing can be profitable even if word‐of‐mouth and network effects are the only benefits. Furthermore, when both benefits are considered, there is significant “economies of scope”—the net profit increases at a faster rate when both word‐of‐mouth and network effects are significant than when only one benefit is present. Finally, our sensitivity analyses demonstrate that public beta testing remains highly valuable to software firms over a wide range of testing and market conditions. In particular, firms will realize greater profits when recruiting public beta testers who are interested in the software but unable to afford it.

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The Influence of Software Process Maturity and Customer Error Reporting on Software Release and Pricing

Cited by 21 publications

References 46 publications

Pricing Strategies under Behavioral Observational Learning in Social Networks

Pricing Strategies under Behavioral Observational Learning in Social Networks

Utilizing Public Betas and Free Trials to Launch a Software Product

The Economics of Public Beta Testing

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