Agent-Based Simulations of the Software Market under Different Pricing Schemes for Software-as-a-Service and Perpetual Software

Juthasit Rohitratana () and Jörn Altmann
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Juthasit Rohitratana: Technology Management, Economics, and Policy Program (TEMEP), Seoul National University

No 201064, TEMEP Discussion Papers from Seoul National University; Technology Management, Economics, and Policy Program (TEMEP)

Abstract: In this paper, we present agent-based simulations that model the interactions between software buyers and vendors in a software market that offers Software-as-a-Service (SaaS) and perpetual software (PS) licensing under different pricing schemes. In particular, scenarios are simulated, in which vendor agents dynamically set prices. Customer (or buyer) agents respond to these prices by selecting the software license scheme according to four fundamental criteria using Analytic Hierarchy Process (AHP) as decision support mechanism. These criteria relate to finance, software capability, organization, and vendor. Three pricing schemes are implemented for our simulations: derivative-follower (DF), demand-driven (DD), and competitor-oriented (CO). The results show that DD scheme is the most effective method but hard to implement since it requires perfect knowledge about market conditions. This result is supported through a price sensitivity analysis

Keywords: Software-as-a-Service pricing; perpetual software pricing; agent-based simulation; Analytic Hierarchy Process (AHP); dynamic pricing; decision support (search for similar items in EconPapers)
JEL-codes: C02 C15 C61 C63 D40 D81 D83 L11 L14 L23 L86 M15 M21 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2010-07, Revised 2010-07
New Economics Papers: this item is included in nep-cmp, nep-ipr and nep-pr~
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Citations: View citations in EconPapers (2)

Published in GECON2010, Workshop on Grids, Clouds, Systems, and Services, Ischia, Italy, 2010

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Persistent link: https://EconPapers.repec.org/RePEc:snv:dp2009:201064

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