The Research On Pricing Of Digital Products In Electronic Commerce

The application of Internet in the business area symbolized the beginning of The Network Economy.Some new rules which are totally different from the traditional economy are demonstrated in The Network Economy, such as the law of increasing marginal utility, the law of decreasing marginal cost and so on.It brings many new issues deserved research in the field of economics.One of the characteristics of The Network Economy is digital products, the definition and basic properties of it are different from traditional products's. It can be produced and consumed in the virtual world through bit stream. With more and more products can be digitalized, people began to pay attention to the problem of associated with digital products,for instance ,the pricing and the copyrights and so on. Its economical characteristic of digital products is differ from the traditional physical products,which leads to a totally different marketing and prcing strategies are used. At present, many initiate research on pricing of digital products has been made, however they don't consider the properties of the digital product and the electronic market systematically. The cost structure of digital products is peculiar; it has a high fixed cost and very low marginal cost, which result in the ineffective of the balance of supply and demand, and the pricing based on marginal cost is inapplicable. Only pricing based on the customer's utility, the firm can get profits. So the utility of customers is the prime factor for network firms to pricing.Analyzing the basic speciality of digital products, the firms, the electronic market environments, the behavior and feature of customers in electronic markets systematically, we can draw a conclusion that the valid pricing strategy of digital products should be based on the value of customers. The differential pricing strategy which is not easy to implement in traditional markets is concerned widely and becamethe basis pricing model in digital products. For the digital products have some peculiarities: the mutability,the customer's preference can be get, and delivery is convenient.All these characteristics make the differential pricing practicability. Moreover, bundling, zero pricing, and Nonliner pricing are all the effective pricing strategies on pricing of digital products. This paper also analyses and studies these pricing strategies.