Support Forums and Software Vendor's Pricing Strategy

Dey, Debabrata and Ghoshal, Abhijeet and Lahiri, Atanu, Support Forums and Software Vendor's Pricing Strategy, Information Systems Research, Forthcoming (December 1, 2020).

Posted: 4 Mar 2019 Last revised: 2 Dec 2020

See all articles by Debabrata Dey

Debabrata Dey

University of Washington - Foster School of Business

Abhijeet Ghoshal

University of Illinois at Urbana-Champaign - Department of Business Administration

Atanu Lahiri

University of Texas Dallas

Date Written: September 29, 2020

Abstract

This research develops a micro-economic model to study the impact of support forums on the software industry. Motivated by the rapid growth of forums such as Stack Exchange, Quora, and Yahoo! Answers, we examine what impact they could have on a software vendor. Since these forums provide an alternative, free source for obtaining software support, one might suspect that this "shadow" competition eats into the profit of the vendor. We find that, while such a conclusion could be right at the initial stages of the forum's entry into the market, it may not be true in the later stages, especially if the forum generates enough momentum. This is because forums, besides playing a substitutive role, also have a complementary effect. At the initial stages, the substitutive role of the forum dominates. However, eventually, if and when the forum grows sufficiently, the complementary role takes control. In the mean time, the vendor can try to mitigate the immediate losses and find temporary relief by adopting a strategy of bundling support services with the product.

Keywords: Forums, Stack Exchange, Software, Support, Bundling, Pricing

Suggested Citation

Dey, Debabrata and Ghoshal, Abhijeet and Lahiri, Atanu, Support Forums and Software Vendor's Pricing Strategy (September 29, 2020). Dey, Debabrata and Ghoshal, Abhijeet and Lahiri, Atanu, Support Forums and Software Vendor's Pricing Strategy, Information Systems Research, Forthcoming (December 1, 2020). , Available at SSRN: https://ssrn.com/abstract=3333589 or http://dx.doi.org/10.2139/ssrn.3333589

Debabrata Dey (Contact Author)

University of Washington - Foster School of Business ( email )

Foster School of Business
511 PACCAR Hall
Seattle, WA 98195-3226
United States
206-543-1855 (Phone)

HOME PAGE: http://faculty.washington.edu/ddey/

Abhijeet Ghoshal

University of Illinois at Urbana-Champaign - Department of Business Administration ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

Atanu Lahiri

University of Texas Dallas ( email )

University of Texas at Dallas
Richardson, TX 75080
United States

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