Research of military software pricing based on binomial tree method

A new method is designed for military software pricing, which is enlightened from binomial tree option pricing model. Firstly, it is constructed about the military 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 military software and successful probability of every stage, which are of strong effects to the price of military 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.