Pricing information services in electronic markets: case study of DecisionNet

Abstract

The Internet has experienced rapid growth since its beginning as a government-funded communications network. This growth has partially contributed to the explosion of commerce on the net. One example of services offered on the Internet is DecisionNet. It provides an electronic environment of decision support and modeling technologies. The purpose of this thesis is to design an equitable pricing scheme for those on-line information service providers. DecisionNet is used as a case study to describe the pricing policies. Service pricing over the internet is still in its infancy. As a result there is not one set model for pricing internet services that can directly be applied to applications such as DecisionNet. The pricing strategy should be based both on pricing theory and industry practices (pertaining to services). This thesis has taken this approach. Research was also conducted on the United States Government's acquisition process. This was necessary because the government is expected to be a major consumer of on-line information services. This thesis has proposed a simple yet effective pricing policy which is designed to recoup both tae fixed and the variable costs associated with providing information services over the Internet. The policy is based on the strategy of market segmentation. The segments have been broken into four areas and further subdivided based on numbers of users and level of usage. Suggestions have also been made in regards to how to recoup both the fixed costs and the variable costs.