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.
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