Digital Media Require New Pricing Methods

The emergence and rapid growth of internet has made it an important media for distributing digital products including: news, books, journals, music, and videos, searching and online services. computer software, stock quotes and financial information. However, the distinctive characteristics of digital products, such as a significant investment cost to produce the first copy, low marginal production cost, low distribution cost, indestructibility, transmutability, and easy to reproduce, suggest that the traditional pricing policies may not apply. Yet, little has been written on pricing for digital products distributed over the internet, and so far few businesses offering digital products have made money on the internet.
The emergence of the internet offers great business opportunities. Many commercial enterprises (especially those based on information-intensive products and services), therefore, are rushing into the online world and new businesses are emerging to provide brand new digital products (services included) to both consumers and organisations. But most businesses ignore that the nature of the electronic marketplace is fundamentally different from that of the physical marketplace and treat commerce on the internet as only an extension of existing business or as an alternative distribution channel. They try to apply old business rules and traditional pricing policies to this brand new environment, and this explains why so far few of them have made money there. This phenomenon implies that traditional business and pricing rules are not applicable, and we need to use fundamentally different models in decision making.
These developments are creating new opportunities for repackaging products or using more efficient pricing strategies through bundling, site licensing, subscriptions, rentals, differential pricing, usage-based pricing, micropayment and various other mechanisms. In addition to this, transmutability of digital products makes them highly customizable and detailed and personal data of consumers are more abundant and easy to gather in computerized market environment. As a result, consumers obtain a higher degree of satisfaction from customized products than average-quality products, and prices can efficiently reflect costs and consumer preferences. Yet, little has been written on pricing for digital products distributed over a digital network. Therefore get inspired by peers on the European Pricing Platform and hear how they manage those challenges.

You are off course also welcome on the 1st of February 2011 at the workshop concerning this topic where we exchange thoughts with Deloitte and Elsevier during an inspiring best practice sharing session. Visit our website for more information.

The European Pricing Platform (ePP) is a ‘Not-for-Profit’ knowledge sharing place focused to support business management, pricing professionals and CxO-level executives in Europe over a variety of industries and sectors. Our target is to update the pricing know-how of the business manager.

European Pricing Platform
Izegemsestraat 7 (3.01)
8860 Lendelede
Belgium

This release was published on openPR.