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The subject of software pricing has been a matter of discussion for a frightfully long time. Software can be a mere complex suggestion as most software developers have varied suggestions on the price that generates the most revenue. This issue has led to different authorities questioning the role of value and price in software. For instance, low pricing of software reflects a lower value of the product while high prices can be an indication of high values. However, there have been cases of developers under valuing the software. Low pricing can lead to low purchases because customers will have the notion that there is a catch towards the product. The perception in markets of low product prices is cheap or valueless products. Studies reveal that inexpensive software application may mean poor quality hence scare customers. On the other hand, higher prices imply higher quality of the software. In this study paper, we explore the subject of software pricing with outstanding focus on apple and Microsoft developers.
The information technology market has had the biggest debate of the role of apple and Microsoft developers in software pricing. The notion present in the software market is that these two companies, through pricing, are monopolistic. There are various advantages and demerits of monopolistic companies especially towards pricing of commodities. According to the software developers, pricing can be a marketing strategy in that low and poor quality might be overlooked, and to high, the price might frighten prospective customer’s away (Lewis, 1998, p. 53). In this sense, pricing sweet spot is the price, which will lead to high profits. Apple and Microsoft are among the software developers the parliament seeks to question their pricing criteria. With the recent unstable software pricing, there is an urgent need for government intervention as it seeks to understand the companies pricing policies. This move will have a significant impact on the software prices, one of them being a drop in prices. Monopolistic companies have a tendency of dominating the pricing of the products because of lack of competition. This is what is happening with the information technology field as few people dominate the market hence its product prices (Davidson & Factor, 2009, p. 67).
Recent information reveals that the innovative use of technology does not always match the innovative new business models in the case of products and services distributed online. Irrespective of the price, every user should have access to IT software and hardware, which is fairly priced. The current international IT market is likely to make it increasingly complex to maintain models basing on geographic carve-up markets (Png & Chen, 2000, p. 47). In as much as manufacturers look forward to making profits from their products, the aspect of prices should be approached with a clear mind. The expense consumers impose on the IT products will also help determine the profits made. However, Apple and Microsoft companies seem to be overlooking the contribution of the customers to their development. Not so many users are familiar with quality and worth of the purchased products hence such malpractices by the developers go unnoticed. For this reason, developers highly price the IT product, which is taking advantage of the naive nature of customers (Culpepper and Associates 1987, p. 56).
On questioning the companies over the unfair pricing of software, Apple and Microsoft list several reasons for their decisions. In this case, software pricing substantially relies on the small market size and the cost of setting up support centers. In addition, the companies base their pricing policies on the imposition of local taxes and duties (Predonzani, Succi & Vernazza, 2000, p. 59). Different factors influence the pricing level of different products in the market including IT products. Small market sizes and new products usually characterize monopolistic markets. In this case, there are several innovations in the market hence affecting the regular pricing of software. The more the field allows further software related innovations, the higher the market prices of the products. In any business setting, the laws of supply and demand should influence software pricing. The market segment for software is increasingly small, and this affects people’s choice of tools of operations. In the current world, IT products have taken up a better part of people’s lives making them be a necessity in every operation (Houghton & Melbourne, 1992, p. 41). In this understanding, it is necessary that the developers avoid overlooking and overcomplicating software pricing schemes. Apart from the monopolistic ideology, the developers can employ other means, to determine software prices. For instance, psychology of price, niche pricing, upgrade pricing, site licenses, quantity discounts, and reseller discounts. On the other hand, the companies should majorly outline the legal issues with pricing because these will determine the software prices. Some of the laws restrict the developers from price dumping and price fixing (Kittlaus & Clough, 2009, p. 72).
The most modern software-pricing model is open source, which means that software should be free. This proposal bases both the economic and social concept of production. However, proponents of this model understand the lack of incentives that go with the model hence the invention of the price per CPU model. This model creates captivating incentives to both users and developers. The working principle of this model is that the less scalable the software, the more CPUs purchasers will obtain hence the higher the software prices. This model is useful to the utility applications such as database servers and web servers. In addition, the model encourages customers to compete to supply the best performing utility.