Week 10 - 03 - Pricing Revenue.pdf - Pricing and Revenue...

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© USKarmarkarPricingRevenue/1Uday S. KarmarkarLA Times Professor of Technology and StrategyPricing and Revenue Capture © USKarmarkarPricingRevenue/2Revenue ModelsFee for service, event or productUnit basedTime basedTiered (freemium, paywalls, multi-class)Advertising supportedOpt-in or forcedReal estate (passive), drive-by (active)Deliver message (banner, display) or deliver eyeballs (click through, search)Subscription (library model)Licensing (music model)
© USKarmarkarPricingRevenue/3Info Product/Service Pricing BasisUnit (package: CD, disk, book, file)Modules and bundles; versioningSubscription (time based fixed fee)Session (time; usage)Download (size)Transaction (number, quality, volume)Seat (ranges of users)Site (LAN, group)Processor capacity (e.g. data base products)© USKarmarkarPricingRevenue/4Paywall Models ProliferateSoft paywalls: metered Esquire: paywall around a single storySports Illustrated: opt-in ad wall; agree to watch a video Atlantic: a selection of content for a feeNew York Times: tiered, free videosNature: subscribers can share for freePaywalls seriously affect ad impressions
© USKarmarkarPricingRevenue/5Technology and FeasibilityPrice discrimination can increase revenue capture substantiallyTypically requires metering of units, quantities, transactions and use ratesUse rates cannot always be meterede.g. CD, books, softwarecustomer resistance and expectationsOn-line metering can be easier butCustomers resist registration, paymentSegmentation : Google vs. FacebookLurkers, casual, sharers, providers© USKarmarkarPricingRevenue/6AdvertisingNegative good; bundled with valued product Huge push: $200bnPrint and TV are still large componentsBut rapidly moving to online and mobileSegmentation and reach are key issuesTechnology affects insertion, effectivenessPlacement (in content)Localization, interest (e.g. search), segmentsInterleaved (TV, web videos, magazines)Real estate (web sites, banners, pop-ups)Ad money will subsidize channels which can support ad messages, target purchasers

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