Analysis of software pricing based on binomial tree option pricing model

A new method is designed for software pricing, which is enlightened from binomial tree option pricing model. Firstly, it is constructed about the software pricing model based on binomial tree. Secondly, computation method is shown later. Thirdly, the applicability of this computation method is demonstrated by an example. According to the calculation results, it is found out that the most two important variables are initial value of software and successful probability of every stage, which are of strong effects to the price of software. In addition, it is also concluded that value created in coding stage is usually smaller than value created in requirements stage and design stage.