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pricing services online, economics of

Author

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  • Anja Lambrecht

Abstract

Firms deliver a variety of services online, ranging from content, software and banking to entertainment and networking. This article examines a firm's pricing decision for online services. It first discusses how a firm's decision of pricing services online differs from offline pricing decisions. It then discusses how firms can price services online. It examines the firm's choice between ‘fee’ or ‘free’ revenue models. It then turns to a firm's decision on its pricing structure. This includes the decision whether to sell or to rent, and the choice between pricing plans (e.g. pay-per-use, flat-rate tariffs or more complicated multi-part tariffs) or bundling. Lastly, it turns to the role of pricing in new product adoption.

Suggested Citation

  • Anja Lambrecht, 2013. "pricing services online, economics of," The New Palgrave Dictionary of Economics,, Palgrave Macmillan.
  • Handle: RePEc:pal:dofeco:v:7:year:2013:doi:3898
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    File URL: http://www.dictionaryofeconomics.com/article?id=pde2013_P000380
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    Citations

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    Cited by:

    1. Karen Yeung, 2018. "Algorithmic regulation: A critical interrogation," Regulation & Governance, John Wiley & Sons, vol. 12(4), pages 505-523, December.

    More about this item

    Keywords

    bucket pricing; flat-rate tariff; freemium; online; pricing; three-part tariff;
    All these keywords.

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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