Creating Competitive Advantage by Rethinking B2B Software Pricing CARL ADELSTRAND EMIL BROSTEDT Master of Science Thesis Stockholm, Sweden 2016 This page intentionally left blank Creating Competitive Advantage by Rethinking B2B Software Pricing ”Innovation in pricing may be a company’s most powerful—and, in many cases, least explored—source of competitive advantage” (Hinterhuber & Liozu 2014, p.1) Carl Adelstrand, Emil Brostedt Stockholm, Sweden, June 02, 2016 Industrial Engineering and Management ITM Royal Institute of Technology This page intentionally left blank Master of Science Thesis INDEK 2016:12 CreatingCompetitive Advantage by Rethinking B2B Software Pricing Carl Adelstrand Emil Brostedt Approved Examiner Supervisor 2016-06-02 Esmail Salehi-Sangari Henrik Blomgren Commissioner Contactperson N/A N/A Abstract The choice of pricing model for software products is a complex procedure duetothedi↵erentcharacteristicscomparedtophysicalproducts. Thisthesis Examensarbete investigates and compares software pricing modIeNlsDiEnKa 2B021B6:1s2e tting, and de- Skapa konkurrensfördel genom att scribes how KAM plays a role in executing a pricing model. The research has utvärdera B2B-prissättning been conducted as an opportunist case study onaAvd mebjurok,vaaratechnology com- pany in the B2B sector. The thesis have come to the following conclusions, Carl Adelstrand with data from interviews and literature: Emil Brostedt Godkänt Examinator Handledare 20•16P-0e6rp-0e2tuallicenseiEs,smanadilwSialllechoin-StainnugeartiobeH,eannriakttBrlaocmtigvreenpricingmodel Uppdragsgivare Kontaktperson for Adebro. However, a subscription-based usage independent pricing N/A N/A model is also attractive for the future. • Implicationsofswitchingpricingmodelwouldbelargestwhenchanging between a perpetual and subscription model, where revenue will have the most visual impact. • The most important task for KAM is to communicate the change to current and new customers. KAM and the pricing model must also be structured to support each other to be successful. The thesis contributes to science by providing research on pricing models for manufacturingrelatedsoftware. However,studiesconcerningtheweightingof importancefordi↵erentpricingparameterswouldbeofinterestforthefuture. Key Words: Pricing Models, Pricing, Software, Key Account Management, Perpetual license, Subscription, SaaS, CAM, GD&T, SPC, Metrology i This page intentionally left blank ii Master of Science Thesis INDEK 2016:12 CreatingCompetitive Advantage by Rethinking B2B Software Pricing Carl Adelstrand Emil Brostedt Approved Examiner Supervisor 2016-06-02 Esmail Salehi-Sangari Henrik Blomgren Commissioner Contactperson N/A N/A Examensarbete INDEK 2016:12 Skapa konkurrensfördel genom att utvärdera B2B-prissättning av mjukvara Carl Adelstrand Emil Brostedt Godkänt Examinator Handledare 2016-06-02 Esmail Salehi-Sangari Henrik Blomgren Uppdragsgivare Kontaktperson N/A N/A Sammanfattning Valet av prismodell f¨or mjukvaror ¨ar en komplex procedur p˚a grund av dess olika egenskaper j¨amf¨ort med fysiska produkter. Detta examensarbete unders¨oker och j¨amf¨or prismodeller f¨or mjukvara i B2B sammanhang, och beskriver vilken roll KAM har i genomf¨orandet av en prismodell. Studien genomf¨ordes som en opportunistisk case studie p˚a Adebro, ett teknikf¨oretag inom B2B sektorn. Uppsatsen har kommit till f¨oljande slutsatser, baserat p˚a data fr˚an intervjuer och litteratur: • Perpetual-licenser ¨ar, och kommer forts¨atta att vara, en attraktiv pris- modell f¨or Adebro. Dock ¨ar prenumerationsbaserade prismodeller, med pris oberoende av anv¨andande, attraktiva f¨or framtiden. • De st¨orsta e↵ekterna fr˚an ett prismodellsbyte kommer n¨ar man byter mellan perpetual-licenser och prenumerationslicenser, d¨ar det kommer bli mest synligt p˚a int¨akterna. • Den viktigaste uppgiften f¨or KAM ¨ar att kommunicera prismodellen till kunderna. KAM och prismodellen m˚aste ocks˚a vara strukturerade p˚a ett s˚adant s¨att att de st¨odjer varandra f¨or att n˚a h¨ogst potential. Uppsatsen bidrar till vetenskapen genom att bist˚a med forskning om pris- modeller f¨or tillverkningsrelaterade mjukvaror. Fram¨over vore det intressant att se vidare forskning som utreder vikten av de olika parametrarna av en prismodell. Nyckelord: Prismodeller, Priss¨attning, Mjukvara, Key Account Manage- ment,Perpetual-licens,Prenumeration,SaaS,CAM,GD&T,SPC,M¨atteknik iii This page intentionally left blank iv Declaration ’We declare that all material in this thesis is entirely our own work and hasnotbeenpreviouslysubmittedtothisoranyotherinstitution. Allmaterial in this thesis that is not our own work has been acknowledged and we have stored all material used in this research, including research data, preliminary analysis, notes, interviews, and drafts, and can produce them on request.’ Carl Adelstrand Emil Brostedt Signature Signature June 02, 2016 June 02, 2016 Date Date v This page intentionally left blank vi
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