Business & Information Systems Engineering

Document Type

Research Paper


The market for the new provisioning
type Software-as-a-Service (SaaS) has
reached a significant size and still shows
enormous growth rates. By varying size
of SaaS products, providers can improve
their market position and profits
by successfully acting in the tension
area of customer acquisition, pricing
and costs. We first elaborate differences
concerning product differentiation
between classic software provisioning
models and SaaS. Then, we introduce
a micro-economic based decision
model to maximize the return of a
provider by finding an optimal granularity,
i.e. by varying the size of services.
This paper makes two contributions in
this context: (1) it provides a conceptual
foundation for product differentiation
within the scope of SaaS and
(2) it presents the first implementation
of variable reproduction costs for web
based software offers. The model is illustrated
by a real world case with data
from a SaaS provider.