Valuation and pricing of software licenses to support supplier–buyer negotiations: A case study in the automotive industry

Frank Bodendorf, Manuel Lutz and Jörg Franke

Managerial and Decision Economics, 2021, vol. 42, issue 7, 1686-1702

Abstract: Licensed standard software can be replicated millions of times at near zero cost for the supplier and poses immense challenges for purchasing and cost managers. A model is introduced to evaluate the appropriateness of software prices and thus to support the negotiation and decision process regarding suppliers. The model determines the “value to customer” of a software product using conjoint analysis and converts that value into a theoretical license price. In a case study coming from a large Original Equipment Manufacturer (OEM) it is shown that the developed conjoint model can successfully be used in practice and suggests realistic purchase prices.

Date: 2021
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https://doi.org/10.1002/mde.3336

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:42:y:2021:i:7:p:1686-1702

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