The Impact of Security Risk on Free Trial Strategy for Software Market

Offering a free trial is a common strategy of software vendors, which has been studied by many researchers focusing on the impact of positive network effects. However, the software is not perfectly security, security vulnerabilities may be exploited and incur negative security externalities among software users. In this paper, we examine the free trial strategy in an environment where both positive network effects and security risk exist. The findings indicate that the negative security externality affects the vendor’s decision significantly. Software vendor should offer a free trial when low or moderate negative security externalities and high positive network effects are both satisfied.