Optimal Time-locked Trial Strategy For Software In The Presence Of Piracy

Time-locked trial is one of commonly used marketing strategies in commercial software industry.After the trial,one problem facing with software companies is possible pirates by users.In the presence of piracy,original software company can resort to lawsuit and technical methods to mitigate the negative impact of piracy.At the meantime,marketing strategy like versioning and free trial strategy should be adjusted because of piracy.In this research,we study that how a monopolistic software supplier should respond to different pirating conditions by use of a time-locked trial strategy.We divide the situations into three regions according to the cost of pirating:no-piracy region without threat,no-piracy region with threat and piracy region.We treat the cost of pirating as exogenous variable,which is determined mostly by the legal and economic environment.We determine the conditions under which a trial strategy is optimal and find that if there is piracy,when the customer's basic perception about the quality of the software of is moderate,in the whole piracy region it is better for the company to offer trial while when the basic belief is relatively high or low,the company does not provide trial period unless the piracy cost is relatively tiny.We also find that the optimal trial period length decreases with the piracy cost when there is piracy,while the trend is reversed when there is only a threat of piracy.Considering piracy,the versioning strategy of original software company should be adapted accordingly.In the piracy region,it is better to offer a high-type version of software.In the no-piracy region with threat,the original software company should offer a version with high quality and a version with low quality which is the same as the quality of the pirated software.In the no-piracy region,it is better to offer a high-type version of software.We compare versioning strategy and time-locked trial strategy in the presence of piracy and find that the latter is more applicable to enhance profit.The optimal price increases with the cost of piracy in both of piracy region and no-piracy region with threat.We explain the suggest reasons for these results and give some managerial implications of the findings.