Optimal Software Free Trial Strategy: The Impact of Network Externalities and Consumer Uncertainty

Many software firms offer a fully functional version of their products free of charge, for a limited trial period, to ease consumers' uncertainty about the functionalities of their products and to help the diffusion of their new software. This paper examines the trade-off between the effects of reduced uncertainty and demand cannibalization, uncovers the condition under which software firms should introduce the time-locked free trial software, and finds the optimal free trial time. As software firms have the option of providing free trial software with full functionalities but a limited trial time or limited functionalities for an unlimited trial time, we develop a unified framework to provide useful guidelines for deciding which free trial strategy is preferred in the presence of network externalities and consumer uncertainty.

• 저널Information Systems Research · 23(2) · 488–504
• 토픽Digital Platforms and Economics · Strategy and Management
• DOI10.1287/isre.1110.0348
• 저자Hsing Kenneth Cheng, Yipeng Liu