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Utilizing Public Betas and Free Trials to Launch a Software Product

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  • Amit Mehra
  • Rajib Lochan Saha

Abstract

Many software product firms release a public beta prior to launching its product. Public betas are adopted by innovator consumers and firms use free feedback from these consumers to improve the quality of the product. While trying out the public beta, innovators also learn their product preferences accurately. In addition, opinions expressed by the innovators about the software on public forums like blogs, etc., can introduce a perception bias about the product's quality among the imitator consumers. Therefore, there are demand and cost side tradeoffs in introducing public betas. In addition to public beta, firms can introduce product trials along with the product. Product trials serve as a learning mechanism for all consumers (innovators and imitators), unlike in the case of public betas where this benefit accrues only to innovators. We examine the firm's optimal strategies to introduce public beta and/or product trial. We show that introducing public beta does not necessarily result in a higher‐quality product. However, even when the quality is lower, consumer surplus and social welfare can be higher. Interestingly, while introducing public beta in addition to trial may appear to be optimal, it may not always be so. We show that similar results hold for products with network effects. We also find that even though the marginal value of quality to consumers is higher for products with network effects, the quality of the product can sometimes be lower than the quality in absence of network effects.

Suggested Citation

  • Amit Mehra & Rajib Lochan Saha, 2018. "Utilizing Public Betas and Free Trials to Launch a Software Product," Production and Operations Management, Production and Operations Management Society, vol. 27(11), pages 2025-2037, November.
  • Handle: RePEc:bla:popmgt:v:27:y:2018:i:11:p:2025-2037
    DOI: 10.1111/poms.12740
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    Cited by:

    1. Zibo Liu & Zhijie Lin & Ying Zhang & Yong Tan, 2022. "The Signaling Effect of Sampling Size in Physical Goods Sampling Via Online Channels," Production and Operations Management, Production and Operations Management Society, vol. 31(2), pages 529-546, February.
    2. Zixuan Meng & Lin Hao & Yong Tan, 2021. "Freemium Pricing in Digital Games with Virtual Currency," Information Systems Research, INFORMS, vol. 32(2), pages 481-496, June.
    3. Jalili, Monire & Çil, Eren B. & Pangburn, Michael S., 2024. "Pricing and structuring product trials: Separate versus mixed wine tastings," European Journal of Operational Research, Elsevier, vol. 312(2), pages 668-683.

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