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What factors should be considered when pricing a new financial management software application on Swedish markets?
2005 (English)Independent thesis Basic level (degree of Bachelor)Student thesis
Abstract [en]

When pricing a new financial management software application, there are various factors which have to be taken into consideration. A firm has to understand the internal company factors as well as external environmental factors, including the impact of customer perceptions of price and value. After understanding all the various factors affecting the pricing decision, company can finally choose between the different pricing strategies. To be able to analyze my chosen problem area, I used existing theories, models and researches as a starting point. In my theoretical framework I went through the different internal and external factors affecting pricing decision, as well as different pricing strategies for a new product. In my empirics I wanted to understand and receive insights into how customers experience the prices of financial management software applications currently and what they expect in the future. To be able to carry out this I used a quantitative approach in form of a questionnaire which was sent out to the final buyers. The four internal company factors which have to be taken into consideration are: pricing objectives, marketing- mix strategy, costs and organizational considerations. Aside from these factors, there are important market considerations that affect pricing decisions and strategies. Since most of these are outside the control of the company they are considered external factors and include: the nature of the market, demand and the price elasticity, customers, competitors and other external factors such as sociocultural, technological and political factors. To be able to set the right price for the new financial management software application, the customers´ opinions are extremely important. Eventually, the prospective customer will decide if the price is fair based on his perceived value of the product and service relative to all available options. It was found out from the survey that a big majority of customers thought that the price is very important factor. They also thought that the prices of financial management software applications are fairly high currently, but that the quality of the applications offered is good as well. Moreover the respondents almost unanimously considered the quality to be extremely important characteristic. The other important factor which the company should be aware of the market at the moment is the growing trend towards subscription paying model instead of traditional licensing model, as well as the big interest towards Application Service Provider (ASP). Additionally the majority of the customers would prefer to have the support included into the price. This is something which the firm should take into consideration; maybe by bundling together more of their products and services. After the company has considered all the factors affecting the pricing decision- internal and external factors, including the impact of customer perceptions of price and value, the company has to choose their pricing strategy. In first- time pricing, the general alternatives are either skimming or penetration. In addition product-bundle pricing is something which should be combined with these two strategies, especially since it is really essential pricing method in software industry.

Place, publisher, year, edition, pages
2005. , p. 62
Identifiers
URN: urn:nbn:se:kau:diva-51547Local ID: FEK C-124OAI: oai:DiVA.org:kau-51547DiVA, id: diva2:1100040
Subject / course
Business Administration
Available from: 2017-05-29 Created: 2017-05-29

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • apa.csl
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
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