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Pricing Strategies for E-Sourcing SaaS

Written by J. Ingmar, E. Svensson

Paper category

Master Thesis


Business Administration>Marketing & Sales




Thesis: 2.6.1. Pricing. The building block of BMC that is most concerned about in this article is revenue stream. An important part of the income stream is pricing (Johnson et al., 2009), which can be described as the concept of coordination of economic activities (Thalberg, 2016). Price has a signaling mechanism for both producers and consumers. Producers understand customer preferences, and consumers understand the cost and inventory of goods (Thalberg, 2016). Pricing is closely related to marginal cost. Perloff (2008, p. 206) defines it as "if the company produces one more unit of product, the amount of change in the company's cost", in other words, how much is the cost burden for the company to produce one more product. According to According to economic theory, commodities in a perfectly competitive market are sold at a marginal cost of 26a in the short term, because this means that demand or supply will not exceed each other, but the profit of the enterprise is zero. This is called the "Bertland competition" (Tirole, 1988, p. 6). According to Bertrand competition, prices should be pushed down to the marginal cost of unit production, and the company with the lowest cost will get the largest market share, which is lower than the assumption that all participants have the ability to supply all market shares. However, the rule requires two or more identical products with known prices. When the competitor's cost is not fully understood, asymmetry, and the two products are not perfect substitutes, the rule will change (Spurber, 1995). According to BMC, methods that generate revenue streams may generally be asset sales, usage fees, subscription fees, leasing, licensing, brokerage, and advertising. Fixed pricing is a mechanism that includes a price list and depends on product features, customer base, and quantity. Dynamic pricing is set through negotiation, revenue management, real-time markets or auctions. (Osterwalder et al., 2010, pp. 31-33)., Pricing, strategy, Price Discrimination Tirole (1988) defines price discrimination as "producer price discrimination, when two units of the same physical goods differ The price to the same consumer or different consumers at the time of sale.” (Tirole, 1988, p. 133). Price discrimination is in contrast to uniform pricing, which charges the same price for each unit of goods. (Tirole, 1988, p. 65) According to Perloff (2008), there are three types of price discrimination strategies: primary, secondary and tertiary price discrimination. First-level price discrimination is also called complete price discrimination, which means that companies sell each product at the exact price that customers are willing to pay. Another name for secondary price discrimination is quantity price discrimination. This means that the price of each product changes according to the quantity purchased, but all customers pay the same price for the same quantity of goods.This section gives the background and history of e-procurement and e-procurement. 2.3.1, The so-called first-generation e-procurement and e-procurement platforms appeared in the mid-2000s (Procurement Innovation, 2015), including expenditure analysis, RFx, e-auction, decision optimization, contract management, and supplier information management (Procurement Innovation, 2016; Purchasing innovation, 2015. In the past 20 years, the importance of procurement has increased and it has been transformed from a conventional function to a strategic unit with the support of information technology. The key factors leading to this situation are specialization and globalization, and more More companies are engaged in outsourcing and trading becomes more globalized (Smith and Osagie, 2016). Transportation procurement is traditionally done by purchasing a decomposed version of total demand, which has the effect of potential losses from economies of scale, or choosing a major contractor , And then appoint subcontractors to meet customer needs. The performance of the second method depends on the contractor’s capabilities (Smith, 2011). History, of, trade, and, sourcing, for most During the period of human history, trade has been carried out on the physical market (Napier et al., 2003), and even in modern times, physical catalogs have been used to support procurement (Procurement Innovation, 2015). According to Napier et al. (2003) ) The commercialization of the Internet is a turning point for business activities. E-commerce originated in the 1960s, when emerging technologies were used to develop online business between partners. At that time, the technical solutions were Electronic Funds Transfer (EFT) and Electronic Data Interchange (EDI). ) And private telecommunications networks. EFT is a solution for transferring funds between banks electronically. EDI can electronically share transaction information with suppliers and customers, such as invoices, orders, and bills. Myers’ private telecommunications network is called Value-added networks (VAN) and used for EDI transmission (Napier et al., 2003, p. 27). In the 1980s, mainstream strategies became popular, and companies began to apply outsourcing and supply optimization methods (Procurement Innovation, 2015). Many production organizations are in the supply chain and value chain. The Internet revolution provides a new way to deal with the supply chain. The Internet and network technology are powerful tools to manage the supply chain, increasing the supply in terms of manufacturing speed, cost reduction and flexibility. The efficiency of the chain (Schneider, 2003). 2.3.2, History, of, eNsourcing, and, eNprocurement, the platform, the so-called first-generation e-procurement and e-procurement platform can be accessed in the mid-2000s (Procurement Innovation, 2015), These include expenditure analysis, RFx, electronic auctions, decision optimization, contract management, and supplier information management (purchasing innovation, 2016; purchasing innovation, 2015. In the past 20 years, the importance of procurement has continued to increase, and information technology The transition from a conventional function to a strategic unit with the support of the company. The key factors leading to this situation are specialization and globalization, with more companies engaged in outsourcing and trade becoming more globalized (Smith and Osagie, 2016). Transportation procurement has traditionally been It is done by purchasing a decomposed version of the total demand, which has the influence of the potential loss of economies of scale, or selecting a major contractor and then appointing a subcontractor to meet the needs of the customer. The performance of the second method depends on the ability of the contractor (Smith, 2011). Thesis: Procurement, life, cycle, business procurement life cycle is a description of the standard process in procurement. The procurement life cycle includes seven Stages; information collection, supplier contact, background review, negotiation, fulfillment, consumption, maintenance and disposal and update. The life cycle is not arranged in strict chronological order. For example, these stages can be re-examined in the business relationship (Archer & Yuan , 2000).2.4.2, Strategic, sourcing, lifecycle, the strategic procurement life cycle is the process of planning, procurement, execution and analysis. When a company goes through the procurement life cycle, it has the opportunity to discover new ideas and stakeholders and The possibility and possibility of procurement in supplier interaction (Lamoureux, 2016). Request for information (RFI) is the process of collecting detailed information about potential customers. In essence, it is a general questionnaire that contains information about economics. Data, certificates, customer lists, etc. The purpose of the RFI process is to create and understand possible suppliers (Trent & Monczka, 2003) and generate materials for supplier prequalification (Elmaghraby, 2007). Request for Proposal (RFP) means Suppliers bid on a set of prices and prices for a set of goods or services at a specified time, date, and place. This is in contrast to general online auctions, which usually only focus on prices and last less than an hour (Elmaghraby, 2007). Request for Quotation (RFQ) is the process by which buyers participate in online bidding and compete with each other. Contracts are awarded and the required goods are sold (Huber & Wagner, 2007). RFx is an acronym that stands for RFI, RFP and RFQ. To suppliers The process of sending RFx and receiving the response online is called electronic bidding (Huber & Wagner, 2007)).2.5(Market(conditions(for(SaaS(products(According to Lehmann and Buxmann (2009), one has to be known)) The characteristics of the software industry when the theory is applied to this market. The characteristics discussed in this article are as follows. The e-procurement and e-procurement SaaS market is fiercely competitive, but some characteristics make it more difficult for software vendors 2.5.1, Characteristics, of, software, as, a, product, a way to classify products is competition and exclusivity. Burda and Wyplosz (2013) define non-exclusive goods as "a kind of goods Of consumers cannot legally or physically prevent others from consuming public utilities at the same time. On the contrary, an exclusive commodity is a commodity, for example, you must pay to be able to use it. Read Less