Abstract The purpose of this study is to investigate how indigenous software companies are pricing and licensing their product and service offerings. Nearly a decade ago, almost all software product companies sold software by offering perpetual licences and the software companies performed local installations on their clients’ premises. Today the Software-as-a-Service (SaaS) model is having a profound influence on the way software is currently charged and licensed. In place of an upfront payment in the form of a licence fee the cost of the service, upgrades, backups and support are all included in a specific fee (subscription). The Ireland-Newfoundland Partnership (INP) fund supported this research project. The research focused on Irish and Newfoundland indigenous software companies and with the help of the INP fund, the researcher collected part of the primary data in Newfoundland, Canada. Conducting the study in two jurisdictions enabled the researcher to identify similarities and differences amongst the indigenous software vendors in the two regions. Mixed-methods surveys are pursued to achieve the research objectives. The primary data used in this study was gathered through a questionnaire administered to 220 indigenous Irish software companies, with a response rate of 29% and a series of six semi-structured interviews. The interviews were conducted with owners and managers in Ireland and Newfoundland. This mixed-method survey enabled the researcher to establish information as regards the industry sector, gain an in-depth understanding of how software companies are pricing and licensing their software offerings and understand exportation of software. The findings that emerged from this research show that pricing was dependent on a vendor’s software business model. The outcome of this study shows that there appears to be a mixture of software licensing methods used by software vendors surveyed. Some vendors are using the traditional software licensing methods while others are using contemporary methods such as usage-based methods. A second finding that surfaced from this study relates to the pricing methods used by software vendors surveyed. In general, vendors’ pricing methods are categorised as cost-based, competition-based or customer-based. It emerged that despite the software owners indicating that they use customer-based methods, a cost-based approach dominated both the questionnaire and interview findings. It was also discovered that software vendors were no longer offering pure product or pure services to their customers and that SaaS was increasing in popularity as a pricing model amongst the Irish and Newfoundland software vendors. The outcome of this study offers a software-pricing template attached as Appendix F, which would help practitioners to learn from their experience and induct staff assuming responsibility in this area.
|Submitted - 2009