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Per User Charging Pricing Model : Twitter

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Question:

Describe about the Per User Charging Pricing Model for Twitter.

 

Answer:

Introduction

Twitter is a real-time, social media platform that allows the users to share their ideas and thoughts in the form of tweets that can be 140 characters long. It also allows the users to be updated on the tweets that are put up by other users by providing an option to follow other users. It is a global platform with more than 100 million active users on a daily basis and more than 230 million active monthly users. There has been an immense increase in the usage of Twitter by the users with the increase in the use of social media platforms (Twitter, 2013).

Charge per User Charging Model

There are a number of different pricing models that are used on a real-time platform such as Twitter. Various pricing and charging models include subscription, pay per user/individual user charging, third party supported, ad-hoc payments and many others.

The model that has been recommended for Twitter is to charge the individual users for the usage. It is a model that is most commonly used in the consumer media market and makes use of the scenarios in which the value associated with the transactions is small and allows the ability to be automated as well. This model has also been successful in the discrete online communication and a number of educational applications along with web conferencing platforms as well (Jiang, 2007).

Pros of per User Charging Model

There are a number of advantages that are associated with per user charging model in case of Twitter.

  • Easy distribution and simple billing process

The pricing model of charging from the individual users reflects the desired results in case when the services can be monitored in an effective manner. In case of Twitter, the primary purpose of the platform is associated to serve the social media business and the same works by making a shift from the traditional broadcast channels to a number of different cable channels. The model would allow the distribution of the services easier than the current model. Billing processes and the management of all the billing associated tasks will also become easy. The agreements associated with the billing systems would be communicated in an easier manner along with the ability to bill easy. The customers will also be able to authorize an agreement comprising of the charges that will be applied (Reasonstreet, 2016).   

  • Easier Management of the costs

It is easy to distinguish the user preferences and the set of priority features for the users in the case of a platform such as Twitter. Charging per user for the usage would allow the development of the services and values as per the needs and requirements of the users and would also allow the overall management of the costs easy.  

  • Reduced barriers to customer adoption

The cost that is associated as the startup costs in case of enterprise software or a real time platform such as Twitter is low or negligible. It is because of this reason the customers do not wait to try the service as soon as it is released and increase their use as per their liking and requirements. Charging on a per user basis would allow the users to correctly and accurately assess their needs and requirements from the platform and would also allow them to get adapted to the same in a quick manner.

  • Data-driven customer learning

The model would allow the business unit at the end of Twitter to have a better picture of the usage, needs and expectations of the customers in terms of services and operations. It would also allow the company to get greater feedback and comments in order to refine the pricing model and the pricing scheme along with an idea on the steps to package the services and packages to achieve higher profits and revenues (Webappsuccess, 2016).

  • Increased Customer Satisfaction

The model would also allow the enhancement in the levels of customer satisfaction and engagement from Twitter as the charging would be done according to the usage. There would be increased transparency between the business unit and the customer that would surely enhance the level of trust among the customers.

 

Cons of Per User Charging Model

Along with the pros of the pricing model of charging from per user, there may be a certain points of concern as well. These concerns would be required to be managed and paid attention to in order to gain maximum benefit out of the model and to make a correct decision on whether to adapt the model or not.

  • Use and revenue would be unpredictable

The change in the pricing model to charging it from per user will bring a lot of change in which the service is being currently used by the users. It would result in the difficulty to predict the usage and revenues in advance during the initial period of application. There is also frequent charge of trend in the market. For instance, the rise of social media has occurred in the past few years and technology is continuously advancing itself. There may be a different platform available for the users in the coming years and a shift may be seen from the current to a new platform. It would therefore be difficult to predict the revenue in such technological shifts as well.

  • May not go down well with frequent customers

There would be a section of people who may not be able to adapt the change quickly. The resistance may be seen in the customers who make use of Twitter on a frequent basis as they may prefer the current pricing model over the one that is recommended (Cachon, 2011).

  • Ability to flex without fail

There is also resistance that is seen among the users and the customers when they become unable to flex up in case of the demand or requirement. There are also chances of capacity shortage or burnout that have been seen in the similar cases earlier with other services and platforms. It would therefore be required for Twitter to continue with the excellent service quality and utilization of the strength of public utility. Also, the availability of the service shall not be compromised in case of the change of the pricing model.

  • Implementation Issues

There may also be issues with the successful implementation of the pricing model resulting from a number of different factors such as inefficient planning, change of trend in the market, too much resistance among the customers and many others. It would be therefore required to monitor and manage the implementation process correctly in order to avoid any of the implementation risks associated with the process.

Conclusion

There are a number of drawbacks and issues that are associated with the pricing strategy and model of Twitter. It would be therefore required to bring a change in the current pricing model of Twitter. The recommended pricing model is charging on the per user basis. There are a number of pros that are associated with the model such as easier management and simpler billing process, easier management of the costs, data-driven customer learning and many others. There are also some cons that will be associated with the transformation such as use and revenue would be difficult to predict and there may also be implementation risks and issues.

 

References

Cachon, G. (2011). Pricing Services Subject to Congestion: Charge Per-Use Fees or Sell Subscriptions?. [online] Available at: https://opim.wharton.upenn.edu/~cachon/pdf/cachon-feldman-msom.pdf [Accessed 26 Nov. 2016].

Jiang, B. (2007). Software Licensing: Pay-Per-Use versus Perpetual. [online] Repository.cmu.edu. Available at: https://repository.cmu.edu/cgi/viewcontent.cgi?article=1344&context=tepper [Accessed 26 Nov. 2016].

Reasonstreet, (2016). Business Model: Pay-Per-Use | Reason Street. [online] Reasonstreet.co. Available at: https://www.reasonstreet.co/business-model-pay-per-use/ [Accessed 26 Nov. 2016].

Twitter, (2013). Public. Real-Time. Conversational. Distributed. 1st ed. Twitter Inc.

Webappsuccess, (2016). Pricing models - A Practical Guide to Web App Success. [online] Webappsuccess.com. Available at: https://webappsuccess.com/pricing-models.html [Accessed 26 Nov. 2016].

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