1. Valuation and pricing of software licenses to support supplier–buyer negotiations: A case study in the automotive industry
- Author
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Manuel Lutz, Frank Bodendorf, and Jörg Franke
- Subjects
business.industry ,Strategy and Management ,Automotive industry ,ComputerApplications_COMPUTERSINOTHERSYSTEMS ,Management Science and Operations Research ,Original equipment manufacturer ,Purchasing ,ddc ,Conjoint analysis ,Product (business) ,Software ,Management of Technology and Innovation ,ddc:650 ,ddc:330 ,Business and International Management ,business ,License ,Industrial organization ,Valuation (finance) - Abstract
Licensed standard software can be replicated millions of times at near zero cost for the supplier and poses immense challenges for purchasing and cost managers. A model is introduced to evaluate the appropriateness of software prices and thus to support the negotiation and decision process regarding suppliers. The model determines the “value to customer” of a software product using conjoint analysis and converts that value into a theoretical license price. In a case study coming from a large Original Equipment Manufacturer (OEM) it is shown that the developed conjoint model can successfully be used in practice and suggests realistic purchase prices.
- Published
- 2021
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