Finnish Independent Software Vendors' International Pricing. A Survey Study Among TIEKE’s IT-Cluster Members

Abstract

Price is the only factor in marketing mix generating profits. All others are costs. Considering the importance of the issue, it is surprising, that only very little research has been targeted at pricing. To partially fill in the wide research gap, in this thesis Finnish independent software vendors’ (ISV) international pricing has been researched with main research question being: “How do Finnish ISVs conduct pricing of their products in the international markets?”. There are seven sub-questions aimed at providing sufficient closer information to answer the main research question.

In the theoretical part of the thesis concepts price, pricing and pricing strategy are explained. Not all pricing methods nor pricing strategies are presented, but the reader will gain basic understanding to the pricing issues. Since pricing has been largely neglected in economic science literature, most of the material in the theoretical part is derived from various economic science journals. Especially in pricing chapter (chapter 3), different existing models have been studied and some have been merged together for a more complete view.

The empirical study was conducted as a survey study with electronical survey-form targeted at TIEKE’s IT-Cluster exporting companies. Results were analyzed in descriptive statistical manner with Excel and Wisco Survey Power. Findings suggest, that majority of Finnish ISVs do not do cost calculations when pricing, use mostly market pricing, top management’s role is dominant in making pricing decisions, finance and accounting personnel have very little power and international price levels are kept at domestic level.