Pricing of Digital Goods - Andreas Weigend

1 .The Networked Economy (15): Information Management, Strategy, and Innovation 网络经济：信息管理，战略和创新 Pricing in the Networked Digital Economy 数字产品定价

2 .Chris Anderson: Free! The new model is based not on cross-subsidies -- the shifting of costs from one product to another -- but on the cost of products falling fast. The last debates over free versus pay online are ending. New York Times. Casual games. Google . Trends Extension of cross-subsidy to more industries. Anything that touches digital networks feels the effect of falling costs. Transistors , storage, or bandwidth: cheap enough to be safely disregarded. Free doesnt mean that someone isnt making money. The monetary benefits of Craigslist are distributed among its users.

3 .Chris Anderson: Free! The new model is based not on cross-subsidies -- the shifting of costs from one product to another -- but on the cost of products falling fast. The last debates over free versus pay online are ending. New York Times. Casual games. Google . Trends Extension of cross-subsidy to more industries. Anything that touches digital networks feels the effect of falling costs. Transistors , storage, or bandwidth: cheap enough to be safely disregarded. Free doesnt mean that someone isnt making money. The monetary benefits of Craigslist are distributed among its users.

4 .Scarce: Then and now What is scarce? Before : Manufacturing and distribution Now: Reputation and attention

5 .Digital convergence 数字聚合 Lots of information is in digital form 大多信息均以数字形式存在 Why is this important? Economics! 为何重要？经济学！ Common infrastructure for 通用的基础设施 Processing, 数据处理 Storing, and 数据存储 Communicating 数据通讯  Prices dropped dramatically 价格大幅下降  Positive feedback, further accelerating development 正反馈，加速的良性循环 Convergence of 数字汇聚 Communication 通讯 Computers 电脑 Consumer electronics 电器 Games 游戏 Home entertainment 家庭娱乐

6 .Economics of digital goods 数字商品的经济意义 Digital convergence / universality 数字聚合 / 通用性 Processing, storage generic … 处理、存储通用 Delivery, communication generic … 传输、通信通用 TCP/IP ：传输控制协议 / 网际协议 … thus inexpensive 所以便宜 Economics of digital goods 数字商品的经济意义 Initial cost (fixed cost) high 初始成本（固定成本）高 Marginal cost low (almost zero) 边际成本低（近乎为零） Distribution cheap, easy, and fast 分销成本低，分销容易、快捷 Supply-side economies of scale (production) 供应方规模经济 Network effects 形成网络效应 Demand-side economies of scale (network).… 需求方的规模经济 … Important for digital goods, where speed etc amplified through technology! 对数字商品至关重要，速度等通过技术获得提升！ … c an create lock-in … 需要锁定客户

7 .Historical categories 历史分类 Physical 实物产品 Service 服务产品 Information 信息产品 Classify these products: 请分类 : Physical 实物 Service 服务 Information 信息 Travel 旅游 Books 图书 Groceries 日用品 Computers 电脑 Mobile phones 手机 Insurance 保险 Dating 交友

8 .Pure service product Pure information products 纯信息产品 Pure physical product

9 .Agenda 教学纲要 Digital goods 数字商品 Digital convergence 数字融合 Properties and economics 特征和经济学 Pricing 定价 Personalized pricing 个性化定价 Group pricing 群体定价 Versioning 版本设计 Bundling 捆绑定价 Reading 阅读 Carl Shapiro and Hal Varian, “Information Rules” 教材 《 信息规则 》 Chapters 1-3 and 5-7 第 1-3 章、第 5-7 章

10 .Types of digital goods 数字商品的类型 Numbers 数字 Text 文本 Sound 声音 Images 图像 Video 视像 G ames 游戏 S oftware 软件

11 .Properties of digital goods (information goods) 数字商品的属性 Original and copy are indistinguishable 原件与拷贝毫无差别 Digital goods are infinitely replicable 数字商品可无限复制 Digital goods are easy to distribute 数字商品易于分销

12 .Information-like goods 信息类商品 Cost structure of information-like goods 信息类商品的成本结构 High fixed costs of production 生产固定成本高 Near-zero marginal cost of (re-)production 近乎零的生产边际成本 Examples 例子 News, financial information, books, music, movies, research 新闻、财务信息、图书、音乐、电影、研究 Microprocessors 微处理器 Telecommunication network 无线通信网络

13 .Pricing of information-like goods 信息类商品的定价 Pricing is difficult… 定价比较困难 … but there are some guidelines: 但也存在一些指导原则 Understand your cost structure 了解你的成本结构 Physical vs ‘information-like’ aspects 实物与‘信息类’方面 Understand your market 了解市场 Opportunity, customers, competitors 机遇、客户、竞争对手 Notes 注 Information acquisition vs information use 信息获取与使用 Music, e.g., Napster (1998 vs 2008) 音乐，如 Napster Value-based pricing 价值定价

14 .Pricing: Flawed pricing practices 定价：有缺陷的定价实践 Cost-plus pricing: Adding a standard markup to the cost of the product 加入成本的定价：在产品成本的基础上增加一个标准的涨价幅度 Purpose is to ensure a fair rate of return 目的是保证公平的回报率 Product- average cost- price-value-Customer 产品 —— 平均成本 —— 价格 —— 价值 —— 顾客 Problems 问题

15 .Pricing: Flawed pricing practices 定价：有缺陷的定价实践 Market share based pricing: Setting price based on market share targets and goals 基于市场份额的定价：定价基于市场份额的目标 The purpose is to meet market share goals at the expense of profit margin 目的是在利润的范围内达到市场份额目标 The key assumption is that profits increase with market share in the long run 假设长期内随着市场份额的增加利润也增加 Problems 问题

16 .Motivation Questions 动因问题 As a buyer, what information do you use to determine how much you are willing to pay for a Dell XPS Laptop? 作为买家，你通过什么信息来决定购买戴尔 XPS 笔记本电脑的价格？ What can a company do to influence consumer’s willingness to pay? 公司怎么来影响顾客支付的意愿呢？

17 .EVC Analysis 对于顾客经济价值的分析 Economic value to the customer ( EVC ): the maximum amount a customer should be willing to pay, assuming that s/he is fully informed about the benefits of the product and the offerings of competitors 对于顾客的经济价值：假设顾客完全知道产品的益处和竞争者所提供的产品 / 服务而愿意支付最大金额 EVC = Reference Value + Differentiation Value 对于顾客的经济价值 = 参考价值 + 区别价值 Reference value: the price of perceived closest substitute adjusted by difference in quantity used 参考价值：根据使用数量不同而进行调整最接近的替代品的价格 Differentiation value: value of a product’s attribute difference between your offering and the close stsubstitute (+ or -) 区别价值：与最接近的替代品不同 的产品属性的价值

18 .EVC Analysis EVC 分析 Positive Differentiation Value 正向差异价值 Reference Value 参考价值 Negative Differentiation Value 负向差异价值 EVC Differentiation Value EVC 差异价值 Superior performance 绩效更优越 Better reliability 可靠性更高 Additional features 附加的特性 Lower maintenance cost 维护成本更低 Faster service 服务更快 Reference Value 参考价值

19 .Communicating EVC to Your Customers 让你的消费者知道 EVC Do not assume customers know EVC 不要认为消费者已经知道 EVC Educate customers is important when 在以下情况下，指导消费者非常重要 ： T he product delivers a stream of benefits over time 产品需要经过一段时间才会显现出一系列的好处 The product is highly innovative 产品高度创新 The fact that consumers are not buying your product is not by itself a reason to cut price. It may be a reason to change your marketing program to justify the price 事实上，不要仅仅因为消费者没有购买你的产品而去降价，原因可能是要你改变营销手段去证实你的价格

20 .Use of EVC EVC 的使用 Advantages 优势 Describe decision process of sophisticated purchasers 可以描述有经验的购买者的决策过程 Enables firm to distinguish between under-promoted vs overpriced product 使公司能够区分促销不足和定价过高的产品 Can indicate attribute improvements which give largest gain in EVC 能够明确如何改进属性可以获得最大的回报 I.e., Focus your improvement effort 也就是可以导向为之所作的努力 Can be a great aid to sales force 可以很好地辅助提高销售能力 Limitations 局限 Actual willingness to pay depends perceived differentiation value and perceived value of the competitive product 实际愿意支付的金额取决于消费者对该产品的价值和同类产品的比较所得出的价值差异

21 .Price-Quality Effect: http://www.sephora.com 价格质量影响 Flower by Kenzo Kenzo 制造的花 Kenzo‘s soft floral with hints of violet, vanilla, and rose, uniquely packaged in poppy embossed bottles is a contemporary fragrance for the modern, city woman who looks to nature for inspiration and renewal. Kenzo 制造的紫罗兰，香草和玫瑰，被包在深红色的浮雕花瓶中，散发着现代的香气，专门为那些看上来自然的现代城市女人。 VERA WANG Created for a man of taste and refinement, Vera Wang. For Men is masculine, seductive, aromatic oriental, designed to elicit desire, emotion and passion. Vera Wang 专为有品味和精致的那人准备。具有男子汉气概，诱人的，芬芳的，专为渴望，情感和激情的再现。

22 .Pricing strategies for information-like goods 信息类商品的定价战略 Personalized pricing 个性化定价 Group pricing 群体定价 Versioning (multiple products with self-selection) 版本管理（多种产品、自助选择） Bundling 捆绑定价

23 .1. Personalized pricing 1. 个性化定价 The ideal economic scenario 理想的经济状况 For a single product, find out how much each customer is willing to pay 对于某件产品而言，首先确定每一位客户愿意支付多少 This amount is called “Willingness To Pay” (WTP) Then set the price for that customer = WTP 然后设定价格 = WTP REVENUE 收入 q p PRICE 价格 DEMAND 需求 q p REVENUE 收入 vs

24 .1. Personalized pricing 1. 个性化定价 Problem: Customers won’t tell you their WTP directly 问题是，客户不会直接说出 WTP Record and analyze past behavior of customer (purchasing patterns) 记录、分析 客户以往的购物习惯 E .g., response to promotions 如对促销的反应 But, in e-business: customer can easily create multiple accounts 但是还有激励因素 Model the current situation of the customer 消费者目前情况的模式化 Take price of competitor into account 例如以 竞争对手 价格为基础 Dynamically adjust price 动态调整价格 Personalization needs to be in real-time 必须实时个性化

25 .1. Personalized pricing 1. 个性化定价 What did Amazon do? 亚马逊做了些什么？ What was the reaction of the customers… 消费者的反应如何？ … empowered by community and communication? 社区赋予消费者权力 Lasted only for a couple of hours 只持续了几个小时 Constraint: Same country, same time, same price 限制：同一国度、同一时间、同一价格 Policy: If experiments, reimburse customers at end of experiment difference between their price and lowest price 原则：如果是试验的话，在试验结束时就消费者的价格和最低价格之间 进行补偿。 Other experimental approaches to determine price 其他试验 Find similar books, try different prices 相同的图书，不同的价格 Reframe as discounts 变相打折

26 .Instead of many prices (personalized pricing) … 不提供多种个性化定价 … REVENUE 收入 q p PRICE 价格 DEMAND 需求 q p REVENUE 收入

27 .Differential pricing 差异定价 … offer two (or a few) prices… 而提供两种或少数几种价格 Revenue 收入 q p Price 价 格 Demand 需 求 SEGMENT 1 细分市场 1 SEGMENT 2 细分市场 2 Price 2 价格 2 q p DEMAND 需求 收入 REVENUE Price 1 价格 1 vs. 与

28 .. Group pricing, 3. Versioning 2. 群体定价 3. 版本管理 2. Group pricing 群体定价 Identical product 相同产品 Multiple prices 多种价格 Note 注 Price depends on customer’s attributes 价格取决于客户特性 Customer has no choice between different versions of product 客户对产品版本没有选择 Attribute determines price 特性决定价格 E.g., Student discounts 如学生折扣 E.g., Airfares in China in 1990: Foreigners paid twice as much as Chinese 如九十年代老外在华购买机票价格翻番 3. Versioning 版本管理 Multiple products 多种产品 Multiple prices 多种价格 Customer selects version 客户选择版本 Example 例 Airline seats: Economy vs business class 航班座位：经济舱与公务舱 Advance & penalty & no legroom 提前预订 、 违约罚金、座位空间小 Book anytime & refundable & some legroom 随时预订、可全额退款、座位空间大

29 .3. Versioning: Guidelines 3. 版本管理：指导原则 Some rules, based on needs of different customer segments (not on costs) 一些建立在不同细分客户需求基础上的原则 （而不是成本） Design versions that accentuate differences in the needs of the segments 版本的设计突出这些细分市场需求的不同点 Choose a pricing structure that highlights these differences between the segments 选择一种突出不同细分市场的定价结构 Aim for complements 目的在于配套件 E.g., Online vs offline 网上与网下 Strategy 战略 Acquire users with low-end version 先用低端版本赢得用户群 Free vs inexpensive 免费或廉价的 Convert users of low-end version to high-end 将低端版本用户转化为高端版本用户 Design high-end version, then remove features to produce low-end version (value-subtract) 按高端市场设计，然后去掉一些功能来生产低端版本（价值削减） E .g., Digital images, Software (disabling features easier than adding features), 如软件、数码图像（去掉功能比增加功能要容易些）