A Prior-Predictive Monte Carlo Framework for Pricing Complex Data Products in Data-Poor Markets

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Authors: Adam L. Siemiatkowski, Victor Zhirnov, Kashyap Yellai, Gabriella Bein, Terresa Zimmerman
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Abstract

Pricing advanced data products - particularly in complex fields such as semiconductor manufacturing - is a fundamentally challenging task due to the sparsity of publicly available transaction data, and its frequent heterogeneity and confidentiality. While data value depends on multiple interacting factors, such as technical sophistication, quality, utility, and licensing rights, traditional pricing methods tend to rely on ad-hoc heuristics or require massive amounts of historical transaction data. In an increasingly data-based economy, we introduce a prior-predictive Monte Carlo framework that enables the generation of fair, consistent, and justified price ranges for data products in the absence of empirical data. By simulating many plausible pricing 'worlds' and deal configurations, the framework produces stable probabilistic price bands (e.g., P5/P50/P95) rather than single point estimates, creating an auditable and repeatable probabilistic pricing system with business realism enforced via constraint-truncated priors. The proposed model bridges traditional data pricing rooted in professional experience with a data-based approach that also allows for classical Bayesian updating as more transaction data is accumulated.

Fields of Study & Subjects

Digital Platforms and Economics Big Data and Digital Economy Statistical Methods and Bayesian Inference

Publication details

Journal / source
arXiv (Cornell University)
Publication date
27 January 2026
Document type
Preprint