Pricing of digital innovations as an entrepreneurial process

Abstract

How do entrepreneurs set a price for digital innovations they develop and market? This is an important question in current information society where digitalization is making established pricing models outdated. In this study, we focus on this issue by examining what kinds of activities and resources entrepreneurs possess when pricing digital innovations. Based on five case studies, including 37 interviews with key decision makers involved in the pricing process, we found that pricing of digital innovations can be conceptualized as an entrepreneurial process in which the pricing capabilities are developed based on the resources at hand. In this view, the pricing model is adjusted through negotiations with customers as an iterative process. Our findings contribute to the IS literature by integrating insights from RBV, DRBV, and entrepreneurship theories to the pricing process of digital innovations.