SPECIFICATIONS OF PRICING IN THE IT SECTOR AND PARTICIPATION IN PUBLIC PROCUREMENT

Abstract

The IT industry is characterized by the fastest development in recent decades. The information
technology sector is characterized by some features, among which: some of the highest salaries for specialists;
constant improvement of technologies; a globally open market with high competition; expensive, albeit smallvolume
materials, closely tied to international prices. In addition, specialized software products have a specific
application, which limits the range of potential users. These particularities of the sector pose a number of challenges
for pricing and financial management. The present study sets the following objectives: 1) Review of pricing models
from the standpoint of their applicability in the IT sector; 2) Highlighting the normative and practical features of
participation in public procurement of companies from the IT sector; 3) Analysis of the pricing process in the IT
sector and the relationship of the applied pricing models with the company's financial indicators, with the aim of
discovering potential for increasing profitability, expanding the company's market positions and long-term
maximization of the company's profit. The methodology used here includes systematic analysis; market and costbased
pricing models; analysis of budget data in the company and basic indicators for financial analysis. Based on
empirical observations from the long-term position of financial management in an IT company and the present
analysis, we derive the following main results: The specifics of software product development and accompanying
services for their implementation, staff training, maintenance, updating, etc. determine a different from the
traditional structure of costs in companies from the IT sector. On the basis of empirical observations from the
position of a financial manager in an IT company for many years and the present analysis, we derive the following
main results: The specifics of software product development and accompanying services for their implementation,
personnel training, maintenance, updating, etc. determine a different from the traditional structure of costs in
companies from the IT sector. The classic concept of "unit of production" is not unambiguous for the creation and
realization of software products, and accordingly, direct and fixed costs have a different distribution in the creation
of software products and their distribution. These cost specifics require a different interpretation of some
fundamental categories and tools in price management, such as Break-even Point and Lower Price Limit. These cost
specifics require a different interpretation of some fundamental categories and tools in price management, such as
Break-even Point and Lower Price Limit. At the same time, the market of the IT sector is characterized by high
competition, numerous participants of different scales, easy mobility, frequent specialization, etc. Due to these
features, pricing in the IT sector mainly uses market models and mainly auction pricing, methods of market
competitors and user evaluation. The number of contracts of companies from this sector that fall under the
regulations of the Public Procurement Law is increasing, to which we pay special attention here. As a consequence
of the present study, the following recommendations can be made for price and financial management in IT
companies: A good practice when making price decisions is the use of several pricing models that are applicable and
fully cover the company's activities; Careful compliance with regulatory requirements; Regardless of the good
market positions of individual IT companies and the favorable general market environment, formed as a whole by
the prevailing demand over the supply of IT products and services, do not ignore the cost pricing models that can
support the achievement of long-term sustainable results; Apply adapted analysis of the Break-Even Point and
Lower Price Limit.