Pricing Decisions and Strategies for Software Products in the Presence of Requirement Changes

Pambudi, Pandu Dwi Luhur (2020) Pricing Decisions and Strategies for Software Products in the Presence of Requirement Changes. Masters thesis, Institut Teknologi Sepuluh Nopember.

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Abstract

The presence of software requirement changes (RC) during project development is a critical challenge for the developer to offer software contract designs. Because under the presence of RC, the decisions toward the contract offer will impact to project’s price spent by the developers. Managers of software companies must decide what contract designs to offer to clients in the development of software. Abstracting from an example drawn from the software outsourcing industry, we exhibit three designs of software contracts incorporating fixed price and time-and-materials policies. Specifically, a software company offers a fixed-price but declines the modification for RC (Contract N), offers a fixed-price and agree to RC with additional charge (Contract W), or initially provides a fixed price and then charges an additional fee based on the time-and-material in response to RC (Contract P). We examine the strategic choices of three contract designs in a two-period game. We carry out a full analysis of monopoly and duopoly models; we use the monopoly model as the base model to construct the duopoly model. Meanwhile, in the duopoly model, we capture nine combination scenarios between two developers. We characterize the conditions under which the contracts can be the best decision for developers in different competitive models with price as our decision variable. Furthermore, we provide managerial insights into contract strategies and developers’ performance under the presence of RC. Our finding states if the level of the second period valuation due to additional RC will influence the price and profit depending on the contract designs and combination scenarios. Keywords: software industry; price competition; software contract design; requirement changes

Item Type: Thesis (Masters)
Uncontrolled Keywords: industri perangkat lunak, kompetisi harga, desain kontrak perangkat lunak, perubahan kebutuhan, software industry, price competition, software contract design, requirement changes
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HB Economic Theory > Economic forecasting--Mathematical models.
H Social Sciences > HD Industries. Land use. Labor > HD30.23 Decision making. Business requirements analysis.
H Social Sciences > HF Commerce > HF5416.5 Pricing
T Technology > T Technology (General) > T58.6 Management information systems
Divisions: Faculty of Intelligent Electrical and Informatics Technology (ELECTICS) > Information System > 59101-(S2) Master Thesis
Depositing User: Pandu Dwi Luhur Pambudi
Date Deposited: 13 Aug 2020 01:26
Last Modified: 13 Aug 2020 01:26
URI: http://repository.its.ac.id/id/eprint/77885

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