Adoption, Preference, and Implementation of Different Pricing Models in Data Science Industry

This study aims to analyze the adoption of different types of pricing models used in Indian data science vendor companies. The study is based on a survey questionnaire to rate the choice of pricing models both from a preference and implementation standpoint. The population targeted for this analysis consisted of professionals involved in pricing decisions in their organizations. The study empirically analyzed and compared the preference and implementation of the most used contemporary pricing models - cost-based pricing, competition-based pricing, and value-based pricing. The study results confirm a significantly higher relative preference for value-based pricing over cost-based and competition-based pricing models. However, when it comes to implementation, the value-based pricing model performs lowest compared to the other two pricing models. The authors find that the value-based pricing could not be implemented to the extent it is preferred; however, the same is not true for cost-based and competition-based pricing models. The study concludes that although data science managers are well informed about the advantages of value-based pricing; they are not able to implement the same because of practical issues. On the other hand, cost-based pricing and competition-based pricing are well established and enjoy an equilibrium between preference and implementation. These findings have important implications for the industry as it highlights the contradiction in the adoption of value-based pricing model. The relatively lower adoption of the value-based pricing model and its reasons could be investigated further along with its relationship with the firm's performance.