, Volume 3, Issue 1, pp 19-31
Date: 13 Jan 2011

Product Differentiation for Software-as-a-Service Providers

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Abstract

The market for the new provisioning type Software-as-a-Service (SaaS) has reached a significant size and still shows enormous growth rates. By varying size of SaaS products, providers can improve their market position and profits by successfully acting in the tension area of customer acquisition, pricing and costs. We first elaborate differences concerning product differentiation between classic software provisioning models and SaaS. Then, we introduce a micro-economic based decision model to maximize the return of a provider by finding an optimal granularity, i.e. by varying the size of services. This paper makes two contributions in this context: (1) it provides a conceptual foundation for product differentiation within the scope of SaaS and (2) it presents the first implementation of variable reproduction costs for web based software offers. The model is illustrated by a real world case with data from a SaaS provider.

Accepted after two revisions by Prof. Dr. Bichler.
This article is also available in German in print and via http://www.wirtschaftsinformatik.de: Katzmarzik A (2011) Produktdifferenzierung für Software-as-a-Service-Anbieter. WIRTSCHAFTSINFORMATIK. doi: 10.1007/s11576-010-0258-7.