Utilizing Public Betas and Free Trials to Launch a Software Product

Production and Operations Management, Vol 27, Issue 11, 2018

Posted: 13 Jun 2017 Last revised: 10 Jun 2019

See all articles by Amit Mehra

Amit Mehra

University of Texas at Dallas

Rajib L. Saha

Indian School of Business (ISB), Hyderabad

Abstract

Many software product firms release a public beta prior to launching its product. Public betas are adopted by innovator consumers and firms use free feedback from these consumers to improve the quality of the product. While trying out the public beta, innovators also learn their product preferences accurately. In addition, opinions expressed by the innovators about the software on public forums like blogs, etc., can introduce a perception bias about the product's quality among the imitator consumers. Therefore, there are demand and cost side trade-offs in introducing public betas. In addition to public beta, firms can introduce product trials along with the product. Product trials serve as a learning mechanism for all consumers (innovators and imitators), unlike in the case of public betas where this benefit accrues only to innovators. We examine the firm's optimal strategies to introduce public beta and/or product trial. We show that introducing public beta does not necessarily result in a higher-quality product. However, even when the quality is lower, consumer surplus and social welfare can be higher. Interestingly, while introducing public beta in addition to trial may appear to be optimal, it may not always be so. We show that similar results hold for products with network effects. We also find that even though the marginal value of quality to consumers is higher for products with network effects, the quality of the product can sometimes be lower than the quality in absence of network effects.

Keywords: Software Product Development and Launch Strategy, Public Beta, Software Trial, Software Quality, Software Bugs

Suggested Citation

Mehra, Amit and Saha, Rajib Lochan, Utilizing Public Betas and Free Trials to Launch a Software Product. Production and Operations Management, Vol 27, Issue 11, 2018, Available at SSRN: https://ssrn.com/abstract=2984235

Amit Mehra

University of Texas at Dallas ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States
9728835083 (Phone)

Rajib Lochan Saha (Contact Author)

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 111
India

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
377
PlumX Metrics