The value chain that underlies the pricing includes primary and secondary activities that are necessary for the creation of the product. For the total product of Inari IS, eight primary and four secondary activities can be identified. Primary activities include software development; the access, or the offline version; the data storage; the SaaS adaptation; software and hardware integration; hardware distribution and leasing; sales and marketing as well as support and consulting.
The secondary activities of the value chain form the partner coordination; Legal coordination; the technology coordination as well as the order processing. The secondary activities include tasks to coordinate the primary activities. Since the Inari IS is an almost pure pure play model, the individual points of the value chain can be influenced within the company to make the price favorable.
|Material goods||Digital goods (information)|
|high duplication costs||low duplication costs|
|loss of value through use||Wet profit through use|
|individual ownership||multiple ownership (possible)|
|loss of value through division||value added by division|
|identification and protection||Problems of privacy and data security|
|difficult spread (logistic)||easy spread|
|Price / value easily identifiable||Price / value only subjectively determinable|
|cost easily identifiable||cost hardly identifiable|
|pricing mechanism known||pricing mechanism largely unknown|
|stock valuation possible||Inventory valuation problematic|
|economic theories and models available||theory and model deficit|
In order to be able to evaluate the Inari IS as a digital good, the essential properties such as non-wearability and reproducibility must be taken into account. When copying copies (in this case, new subscriptions) marginal costs are negligible. Therefore, in the pricing above all the initial effort must be considered to calculate the break even point. The advantage of digital goods like the Inari IS over material goods lies in the exponential unit cost degression and the increasing economies of scale. Due to a favorable cost structure, it is possible to take a dominant market position by displacing possible competitors.
In addition, there is a positive network effect, especially with the Inari AIS, because each additional user of the system increases the benefits of the overall system and thus the benefits of existing users.
Indirect network effects are determined by the number and variety of available complementary items. The more complementary goods (integrated hardware and software) are available, the more the benefits of the network participants increase.
For the pricing of Inari IS two strategies can be used. The product strategy aims to make the Inari IS customizable and to subdivide it into bundles of services and variants in order to turn many products into one product. The pricing strategy aims to optimize price formation through bundling of services, personalization and more.
2. Product differentiation
The strategies of product differentiation must differentiate the different products of the information system. This takes place by dividing into different functionality. Horizontal differentiation encompasses all differences based on external appearances or supplementary services (eg customer service, dictionary). In addition, the perceived quality of a product, the “vertical” differentiation can have a decisive impact on sales. In this case, consumers prefer certain products from an equivalent range. Due to the changeability of the information system, product differentiation through further development is easy to realize. New functionalities and objects of a product class can be created without a media break. Product differentiation is an effective tool for reducing the interchangeability of products and provides the basis for pricing.
Personalization is understood as the adaptation of product characteristics to the particular preferences of a consumer. This can be z. B. the individual configuration of a term or the input mask according to customer requirements, or even the selection of the displayed language. These settings and filters are used by the customer himself e.g. made in the dig settings. The benefits of personalization in the SaaS business model are the creation of competitive advantage by satisfying individual customer needs. Personalization makes the customer more committed to the product. This is e.g. This is particularly important in archeology, as the terminology and methods used differ considerably between different countries or even universities. It should be noted that due to the database structure of the information system, the data nevertheless remain comparable with each other, which facilitates cooperation between customers and increases the direct network effect.
2.2. variant form
In contrast to personalization, variant variants of Inari are created by the selective addition of services in modular form. The customer can assemble a product from a portfolio of modules that meets his requirements. This strategy also follows the idea of the flexibility of an information system. Thus, if required, different interfaces to hardware or software can be chosen or e.g. also different analysis methods. This variant formation is an excellent strategy to differentiate from competitors and thus to gain competitive advantages. The software of most competitors in archeology and construction is based on conventional databases and therefore they can not offer this flexibility and also the interfaces to other software and hardware.
2.3 Performance bundling
Several partial services of the information system can be offered in a product package or service bundle. Variants of a service bundle are z. B. created by use restriction (rights, storage capacity) of functional modules and data. In addition, variants, e.g. by adding or omitting special data protection as well as the offer of assistance and service.
The bundling of services can thus be regarded as a subgroup of variant formation. In the case of digital goods, the bundling of variants is more profitable than the sale of individual variants, since marginal costs are low and the demand structure is often largely homogeneous. In case of heterogeneous demand, a “mixed service bundling” should be considered.
Here, the compilation of partial services by product kits is transferred to the customer, which is particularly suitable for the Inari AIS. Software offered as part of a SaaS model should be designed in such a way that variants can be created. With the formation of variants and their grouping into service bundles, the offer can be extended to a product line consisting of variations of a single good.
In practice, this means that the individual functions such as statistical analysis, GIS, customer support or the export of the BDA forms should be purchased separately by the customer as well as a package (eg analysis or test package with workshop and intensive support for the first Months) should be available.
The variant formation and bundling of services of the Inari OIS should not be done by the customer but the customer should be put together with an individual offer as with other providers of software in the construction industry.
3. Price discrimination
Price discrimination implies the goal of offering the same product at different prices. Price formation is not based on the marginal costs, but on the customer value, d. H. the willingness to pay of the respective customer. The goal of price discrimination is to achieve the maximum selling price for each buyer. The associated strategies are divided into three groups:
– For a price maximization (prohibitive price), the provider must be able to clearly identify the individual buyer and know its willingness to pay.
– In a non-linear pricing, goods are not offered in any quantities but in variants or bundles of services.
– The group pricing is based on the characteristics of certain attributes (eg age, job status, interests) of a consumer group. The price discrimination strategy for the Inari IS is particularly suitable, since the individual functions can be easily adapted to the individual needs of the customers.
Due to the low reproduction costs and the relatively low cost of variant formation, the application of price discrimination strategies is particularly recommended for the Inari IS.
Data networks such as the Internet make it possible to obtain a large amount of information from users and potential customers and to use them for the formation of variants and the related price discrimination.
The SaaS model in particular makes it possible to analyze and evaluate a large number of user attributes.
3.1 Personalized pricing
Price maximization requires personalized pricing (perfect price discrimination), which aims to set an individual price for each individual customer or market segment.
Comprehensive knowledge of customer preferences is a prerequisite for this process. In reality, pricing is problematic because there are no reliable methods for determining marginal prices for customers. In addition, there is a risk of reducing customer satisfaction if there are no confidentiality agreements and the different prices are communicated between the customers.
For Inari AIS, personalized pricing using a price calculator based on the formula for price discrimination is an interesting process.
For the Inari OIS a price is recommended on request as the project size in the construction sector is more volatile than in archeology and the communication of prices between companies is less likely. In addition, contractors choosing the Inari OIS are more likely to want integration with the existing information and communication system. Here, based on the integration effort, personalized prices must be formed.
Typically, in both cases, due to the complexity of the service portfolio of the entire SaaS value chain, a large number of pricing attributes must be taken into account.
3.2 variant form
Non-linear pricing requires the strategy of variant formation, which aims to offer different variants (qualities) of a product at different prices. Customers select themselves by their willingness to pay.
An example for the variant formation is the university version of the Inari AIS. Based on the highest quality product and features, a reduced version can be offered for each lower-priced market segment.
Due to the experience of variant formation, the offer of three versions may be advantageous for psychological reasons. In archeology, pricing is based on usage time, frequency of use, and number of concurrent users. Within the framework of usage-based pricing, the rights of use of the individual sub-modules of the service bundle must be clearly defined.
In the Inari OIS the versions for different market segments have yet to be determined.
The rights of use of Inari IS are sold as a subscription. A subscription is not person-specific but consists of a simultaneous user. Different usage rights can be assigned by different types of subscription but can be assigned by the customer to individual users. Subscribers, however, have no restrictions on the period of use and frequency of use. The billing of the subscribed modules takes place monthly or annually.
Another subset of usage-based pricing is organizational licensing, e.g. for universities or urban archeologies. It contains the right to use the Inari AIS for an entire organizational unit. The pricing is per organizational unit and not on the basis of individual users and their user rights.
By using the Organizational Licensing pricing process, transaction and administration costs are significantly reduced. In any case, the price calculation should take into account the maximum number of concurrent users and the amount of data stored to account for the cost of providing computing capacity and the associated expected performance.
3.3 bundling of services
The bundling of services is a subgroup of variant formation with the aim of offering a combined offer of several identifiable partial services at a package price. To set the price for a bundle of services, Inari needs information about the customer’s specific willingness to pay for the partial services. Especially in the SaaS model, the individual offers consist of a large number of partial services. The consideration of the willingness to pay for partial services is possible with the SaaS model if the maximum willingness to pay for individual modules is determined with the help of suitable functions and then an overall offer in the form of a service bundle is created.
3.4 Purpose of group
The purpose of group pricing is to set a different price for different market segments (for example, trenchers, research projects). The possibility of demarcating market segments is therefore the prerequisite for the procedure. The individual customer segments should be as heterogeneous to each other as possible, but have a homogeneity in their internal composition.
The prerequisite for the formation of these segments is that the consumers can be assigned to the individual segments as far as possible by observable features.
The review of group-specific characteristics should be automated through the use of taxonomies (eg industry key) and standards (eg UDDI).
Market segments of the AIS
– Excavation companies
– Urban and Regional Archaeologies
– Research projects
– Specialists (eg osteoarchaeologists)
– Preservation of monuments
– Others (for example castle clubs)
Market segments of the OIS
– Civil engineers
– Facility management
– Project management / management
– General planner
– subcontractors (assembly, trades)
3.5 Price option models
Empirical studies of the SaaS market show that a large number of the pricing models listed above are offered in combinations. In a price option model, the SaaS user can, for example, B. change from a usage-based pricing model to a subscription.
This pricing option model is already being offered by some leading Internet Service Providers (eg T-Online). The change from a limited usage-based price model to a subscription without usage limit can be done directly online. Due to the reduction in transaction uncertainty associated with price options, these should be taken into account in the design of the service bundles.
The consideration of suitable information substitutes (eg test access) should also be taken into account in the price options. By means of a test access, e.g. potential customers are moved to use.