IDEAS home Printed from https://ideas.repec.org/a/inm/orisre/v32y2021i2p653-669.html
   My bibliography  Save this article

Support Forums and Software Vendor’s Pricing Strategy

Author

Listed:
  • Debabrata Dey

    (Foster School of Business, University of Washington, Seattle, Washington 98195)

  • Abhijeet Ghoshal

    (Gies College of Business, University of Illinois, Champaign, Illinois 61820)

  • Atanu Lahiri

    (Jindal School of Management, University of Texas, Dallas, Texas 75080)

Abstract

This research develops a microeconomic model to study the impact of support forums on the software industry. Motivated by the rapid growth of forums such as Stack Exchange, Quora, and Yahoo! Answers, we examine what impact they could have on a software vendor’s pricing strategy. Because these forums provide an alternative, free source for obtaining software support, one might suspect that the shadow competition from them would eat into the profit the vendor makes from selling support services. We find that, although such a conclusion could be right at the forum’s initial and formative stages, it may not hold later, especially if the forum generates enough momentum. This is because forums, besides playing a substitutive role, also have a complementary effect. At the initial stages, the substitutive role of the forum dominates. However, if and when the forum grows sufficiently, the complementary role eventually takes control. In the meantime, the vendor can try to mitigate the immediate losses and find temporary relief by adopting a strategy of bundling support services with the product.

Suggested Citation

  • Debabrata Dey & Abhijeet Ghoshal & Atanu Lahiri, 2021. "Support Forums and Software Vendor’s Pricing Strategy," Information Systems Research, INFORMS, vol. 32(2), pages 653-669, June.
    • Handle: RePEc:inm:orisre:v:32:y:2021:i:2:p:653-669
    DOI: 10.1287/isre.2020.0988
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/isre.2020.0988
    Download Restriction: no
    File URL: https://libkey.io/10.1287/isre.2020.0988?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Terrence August & Duy Dao & Kihoon Kim, 2019. "Market Segmentation and Software Security: Pricing Patching Rights," Management Science, INFORMS, vol. 65(10), pages 4575-4597, October.
    2. Terrence August & Tunay I. Tunca, 2008. "Let the Pirates Patch? An Economic Analysis of Software Security Patch Restrictions," Information Systems Research, INFORMS, vol. 19(1), pages 48-70, March.
    3. Oz Shy & Jacques‐Françlois Thisse, 1999. "A Strategic Approach to Software Protection," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(2), pages 163-190, June.
    4. William James Adams & Janet L. Yellen, 1976. "Commodity Bundling and the Burden of Monopoly," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(3), pages 475-498.
    5. Hemant K. Bhargava & Vidyanand Choudhary, 2008. "Research Note--When Is Versioning Optimal for Information Goods?," Management Science, INFORMS, vol. 54(5), pages 1029-1035, May.
    6. Yannis Bakos & Erik Brynjolfsson, 2000. "Bundling and Competition on the Internet," Marketing Science, INFORMS, vol. 19(1), pages 63-82, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Peng, Shuxia & Li, Bo & Zheng, Wei, 2024. "Impact of consumer valuation updating in a competitive software market," Omega, Elsevier, vol. 123(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nie, Jiajia & Zhong, Ling & Li, Gendao & Cao, Kuo, 2022. "Piracy as an entry deterrence strategy in software market," European Journal of Operational Research, Elsevier, vol. 298(2), pages 560-572.
    2. Hasan Cavusoglu & Huseyin Cavusoglu & Xianjun Geng, 2020. "Bloatware and Jailbreaking: Strategic Impacts of Consumer-Initiated Modification of Technology Products," Information Systems Research, INFORMS, vol. 31(1), pages 240-257, March.
    3. Atanu Lahiri & Debabrata Dey, 2013. "Effects of Piracy on Quality of Information Goods," Management Science, INFORMS, vol. 59(1), pages 245-264, June.
    4. Tarek Abdallah, 2019. "On the Benefit (Or Cost) of Large‐Scale Bundling," Production and Operations Management, Production and Operations Management Society, vol. 28(4), pages 955-969, April.
    5. Ritwik Raj & Mark H. Karwan & Chase Murray & Lei Sun, 2022. "Itemized pricing in B2B bundles with diminishing reservation prices and loss averse customers," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(4), pages 375-392, August.
    6. Stole, Lars A., 2007. "Price Discrimination and Competition," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 34, pages 2221-2299, Elsevier.
    7. Rajeev K. Tyagi, 2004. "Technological Advances, Transaction Costs, and Consumer Welfare," Marketing Science, INFORMS, vol. 23(3), pages 335-344, January.
    8. Li, Jianbin & Liu, Lang & Luo, Xiaomeng & Zhu, Stuart X., 2023. "Interactive bundle pricing strategy for online pharmacies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    9. Can Sun & Yonghua Ji & Xianjun Geng, 2023. "Which Enemy to Dance with? A New Role of Software Piracy in Influencing Antipiracy Strategies," Information Systems Research, INFORMS, vol. 34(4), pages 1711-1727, December.
    10. Gastón Llanes & Andrea Mantovani & Francisco Ruiz-Aliseda, 2019. "Entry into Complementary Good Markets with Network Effects," Strategy Science, INFORMS, vol. 4(4), pages 262-282, December.
    11. Mark Armstrong, 2016. "Nonlinear Pricing," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 583-614, October.
    12. Atanu Lahiri & Rajiv M. Dewan & Marshall Freimer, 2013. "Pricing of Wireless Services: Service Pricing vs. Traffic Pricing," Information Systems Research, INFORMS, vol. 24(2), pages 418-435, June.
    13. Tunay I. Tunca & Qiong Wu, 2013. "Fighting Fire with Fire: Commercial Piracy and the Role of File Sharing on Copyright Protection Policy for Digital Goods," Information Systems Research, INFORMS, vol. 24(2), pages 436-453, June.
    14. Terrence August & Duy Dao & Marius Florin Niculescu, 2022. "Economics of Ransomware: Risk Interdependence and Large-Scale Attacks," Management Science, INFORMS, vol. 68(12), pages 8979-9002, December.
    15. Akifumi Ishihara & Noriyuki Yanagawa, 2013. "Dark Sides of Patent Pools with Compulsory Independent Licensing," CARF F-Series CARF-F-318, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    16. Terrence August & Duy Dao & Kihoon Kim, 2019. "Market Segmentation and Software Security: Pricing Patching Rights," Management Science, INFORMS, vol. 65(10), pages 4575-4597, October.
    17. Kamel Jedidi & Sharan Jagpal & Puneet Manchanda, 2003. "Measuring Heterogeneous Reservation Prices for Product Bundles," Marketing Science, INFORMS, vol. 22(1), pages 107-130, July.
    18. Sonja Lehmann & Peter Buxmann, 2009. "Pricing Strategies of Software Vendors," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 1(6), pages 452-462, December.
    19. Hemant K. Bhargava, 2012. "Retailer-Driven Product Bundling in a Distribution Channel," Marketing Science, INFORMS, vol. 31(6), pages 1014-1021, November.
    20. Mikkonen, Karri & Niskanen, Hanna & Pynnönen, Mikko & Hallikas, Jukka, 2015. "The presence of emotional factors: An empirical exploration of bundle purchasing process," Telecommunications Policy, Elsevier, vol. 39(8), pages 642-657.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orisre:v:32:y:2021:i:2:p:653-669. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.