Economic value estimation-based pricing for software as a service

The key to pricing software as a service (SaaS) is to determine an appropriate subscription price level. However, extant pricing methods for "perpetual" license based on-premise applications should be re-examined in SaaS because the revenue sources between traditional software vendors and SaaS vendors are different. This article studied SaaS pricing issue by introducing an economic value estimation-based method. The factors driving customer' values were extracted and an illustrative example is presented. Our work could facilitate SaaS vendors' pricing by providing a set of factors for estimating differentiation value and a methodological guidance.