Dynamic Subscription Pricing for Digital Service Platform
DOI:
https://doi.org/10.52731/lbds.v004.234Keywords:
Dynamics, Subscription pricing, Digital servicesAbstract
This research explores the dynamics of subscription-based revenue models, with a particular emphasis on the long-term pricing of the freemium model in digital service markets. By employing a continuous-time dynamic control model, the study examines how companies can strategically determine subscription prices to maximize overall profitability. The analysis focuses on the relationship between subscription fees, user base segmentation, and company investments in product enhancements. The findings i ndicate t hat subscription pricing are essential for converting free users to paid subscribers and lowering operational costs. Moreover, the results offer valuable insights for digital service providers on optimizing their pricing decisions to boost platform profitability.
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