The Study On Two-stage Pricing Strategy Of IaaS Cloud Service Based On Extended Hotelling Model

Cloud services is a new type of IT service model.With the acceleration of the commercialization process,the competition between suppliers is becoming increasingly fierce and pricing is becoming the core issue of the competition.As an underlying resources,IaaS cloud services have salient features different from other segments of the market.Cloud service suppliers need to develop effective pricing strategy in order to ensure long-term development in the market competition.Therefore,it is of great significance for the healthy and stable development of the cloud service industry to make a systematic and reasonable research on the pricing strategy of IaaS cloud service and to build the extended Hotelling model as well as to provide scientific and reasonable pricing strategy for the suppliers in different development stage.Firstly,to determine the market characteristics of the IaaS cloud service and identify the internal and external factors affecting the pricing of IaaS cloud services have become the theoretical basis of our research.Secondly,all the factors will be introduced into the extended Hotelling model.Under the premise of guaranteeing the utility of the user,the profit and the market share are taken as the indexes to measure the optimal pricing.Also,the reverse derivation method is used to find the early equilibrium pricing based on the long term and short term then to analyze the early pricing under the optimal perspective.Finally,based on the above study,Moore's Law is introduced into the extended Hotelling model.By taking time as the variable of the cost and the user's usage,trying to examine the dynamic pricing model of the two providers providing different quality services in the later market.This paper studies the effect of asymmetric factors on pricing and furthermore,compares it with the existing research to examine the volatility of the pricing of the two providers on the time axis in order to propose the pricing strategy for the suppliers in the early and late development stage.Through the model study and numerical analysis,it is concluded that the pre-pricing based on the long-term perspective is better than the pricing based on the short-term perspective.As time passing by,pricing has a rapid decline in the initial stage of the final market.The initial discount reaches the peak and then decreases gradually.What's more,the discount power increase with the rise of user's usage.Recommendations are as follows: For those suppliers whose product advantage is not prominent,it is more suitable for them to make higher prices than their competitors in the early market.In the late market,a substantial price reduction of the initial preferential efforts should be greater than the competitors and gradually fix the price lower than that of the competitors.Enterprises should focus on the input of market monitoring,such as rapid access to user sensitivity and changes in compatibility and transfer costs etc.to provide basis for differentiation pricing.However,with the expansion of the market size,enterprises should reduce the corresponding input.