Journal
INFORMATION SYSTEMS RESEARCH
Volume 23, Issue 2, Pages 488-504Publisher
INFORMS
DOI: 10.1287/isre.1110.0348
Keywords
software free trial; time-locked free trial; demo software; experience goods; network effect; product trial; product sampling
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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.
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