Pricing information goods

Abstract

PurposeThe purpose of this paper is to show that information goods allow new forms of second degree price discrimination because of their economic special features. In addition, it shall be explained why it makes economical sense for information providers to make offers free of charge, and how price discrimination can assist them thereby.Design/methodology/approachThis paper is a literature‐based and practical/analytical depiction, showing in which context the three price discrimination forms have developed and how they are effectively applied.FindingsWindowing, versioning, and bundling are very effective strategies of price discrimination for information goods. This can be illustrated through various application examples. With the division of information content and media carriers a clear distinction between windowing, versioning, and bundling is achieved.Practical implicationsInformation providers receive support for the design of their pricing policy. It is obvious, that with the aid of the depicted price discrimination variants, both market penetration with cost free offers and the generation of revenues from product sales can be aimed for.Originality/valueWhat is new about the paper is the first time comparative portrayal of three recent second degree price discrimination forms and their application to information goods.