Cloud Services and Pricing Strategies for Sustainable Business Models: Analytical and Numerical Approaches

Se-Hak Chun
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Se-Hak Chun: Department of Business Administration, Seoul National University of Science and Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea

Sustainability, 2019, vol. 12, issue 1, 1-15

Abstract: Previous studies have introduced different potential pricing strategies for cloud services. However, not much research has been done comparing subscription pricing and pay-per-use pricing, which are commonly used pricing schemes. Also, there are very few studies which analyze a two-part tariff pricing scheme for cloud services, even though this option may increasingly attract service providers as the cloud market becomes more competitive and the profit margin grows narrower. Previous research has focused on firms’ profitability rather than social welfare due to the limitations of free services. This study uses theoretical and numerical analysis to compare the social welfare and profitability of three pricing schemes commonly used by firms: subscription pricing, pay-per-use pricing, and two-part tariff pricing. It shows that the pay-per-use pricing is the best solution from the perspective of social welfare, which contrasts with the conclusion of a previous study stating that social welfare is maximized under a two-part tariff. This paper also shows that the two-part tariff is the most profitable pricing scheme for firms.

Keywords: sustainable business model; cloud computing; service models; two-part tariff pricing; subscription pricing; pay-per-use pricing (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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