"Pay as You Go" or "All You Can Eat"? Pricing Methods for Computing and Information Services

Bhargava, H K and Gangwar, M (2016) "Pay as You Go" or "All You Can Eat"? Pricing Methods for Computing and Information Services. In: 2016 49th Hawaii International Conference on System Sciences (HICSS), 5-8 Jan 2016, Koloa, HI, USA.

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Abstract

This paper examines the ubiquitous "Pay as you Go" (per unit pricing) and "All you can Eat" (buffet pricing) schemes widely adopted for SAAS and other computing services, and compares these against three-part tariff (3PT), widely used in cell phone industry. We establish the conditions under which one plans works substantially better than other. The 3PT dominates when usage heterogeneity is low and value heterogeneity is high. Under normal conditions, a single 3PT produces higher profit than even a menu of per-unit and buffet plans. The per unit plan is best on market coverage, but buffet pricing generally creates the highest consumer surplus.

Affiliation: Indian School of Business
ISB Creators:
ISB CreatorsORCiD
Gangwar, Mhttps://orcid.org/0000-0003-0661-5922
Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: information services;pricing;ubiquitous computing;pay as you go;all you can eat;pricing methods;computing service;information service;ubiquitous scheme;SAAS;cell phone industry;3PT;buffet pricing;Pricing;Cost accounting;Software as a service;Monitoring;Face;Web services;per unit price;buffet Price;hetrogenity;three part tariff
Subjects: Financial Management
Finance
Depositing User: Veeramani R
Date Deposited: 27 Sep 2018 09:34
Last Modified: 12 Apr 2019 06:51
URI: http://eprints.exchange.isb.edu/id/eprint/592
Publisher URL: https://doi.org/10.1109/HICSS.2016.648
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