Optimal Pricing Modeling for New Entrants in a Competitive Environment

This paper investigates two pricing strategies adopted by late-market software vendors when they compete in a competitive environment, one is to launch products sequentially under a freemium model, and the other is to sell complete products directly. First, a game model with both parties acting simultaneously is constructed to analyze the optimal pricing and revenue of both parties. Secondly, the effects of transfer costs and network externalities are explored through numerical simulations. The results show that transfer costs have a negative impact on new vendors, but the size of transfer costs is different, and network externalities have a negative impact on the equilibrium prices set by the two vendors.