Value pricing in presence of network effects

Value pricing requires a marketer to price his/her product according to the value the product brings to its user. A product with network effects makes it difficult to assess the value of the product to its customer, thus presenting a challenge to the value pricing principle. This paper reviews the relevant literatures in value pricing and network effects and provides an integrated model to price products with network effects. The value of a product with network effects is decomposed into two parts: autarky value and synchronization value. Linearly combining the two types of values, the model can price both stand‐alone products (with synchronization value equal to zero) and network products (with or without autarky value).