Pricing Information Goods With Multiple Subscription Terms

Subscription pricing strategy has become a fascinating dominant strategy as Software as a service(SAAS)has greatly broadened adoption of subscription model.In addition,we observed firms seeking to multiply their subscription options to attract consumers with different preferences and budgets by providing flexible subscription lengths as long as monthly,quarterly,annually or multi-year.However,this strategy of offering a menu of subscription terms is widely used but little researched.We view subscription length as a horizontal dimension to study the best scheme of licensing options,such as what is the optimal number of terms,how to design term lengths and prices.Our results indicate that offering multiple subscription term is a valuable strategy,which is more fitting to consumers' preference and more beneficial to firms than rigid subscription.Further,we find that time discounting(the extent of discounting future),we also show how price discount on long-term should be set to attract consumers.Finally,we find that customers repeat purchase will affect above optimal tactics,the price discount on the long-term increases,while the optimal price of singleterm decreases in customers churn rate.The study enriches research on information goods pricing,and also provides insights into how vendors should design the licensing options to increase the profit.