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Pricing Strategies for Digital Goods

 

A cause, as well as a consequence, of their possibility to have multiple location is the fact that their availability is not geographically restricted: unless the access to a given digital good and its distribution are limited by infrastructures (little or no internet connection available), or by some regulations (censorship, unlawful properties of the product, etc
             ), digital goods are available to anybody, wherever he or she is located, and with almost no intermediaries. In addition to their unlimited geographical availability, digital goods are also available regardless of the time: if a given good is accessible, then it can be purchased whenever a customer wants. The whole distribution process of digital goods is thus completely different from the one of physical goods.
             Their absence of physical existence has some consequences also on attributes usually linked to the physical nature of a good: they are very easy to reproduce at almost no cost. The possession of such good is easily transferred (and, actually, spread), so is the intellectual property, which becomes the main form of property. Those two characteristics however can backfire as they make illegal reproduction and distribution easier than for physical goods.
             Digital goods are eventually not subject to physical obsolescence. Even in the case of an incompatibility problem with more modern information processing systems or software, such as operation systems, it is always possible to adapt the set of data that makes the digital good to be processed again. Digital goods are thus not influenced by some factors which would have been crucial in determining the future of a given physical good.
             As well as on the distribution process and the post-purchase life of a digital good, their non-physical nature has some consequences on characteristics of their production process, and so their cost structure.
             As opposed to physical goods, the reproduction of a digital good is costless money-wise.


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