At What Price?

I recently stumbled across a book by Neil Davidson called “Don’t just roll the dice: a usefully short guide to software pricing”. It’s an amazing read and prefect in length, you could pick it up and finish in about 30 minutes, or if you a painfully slow reader like myself, an hour. The book focuses on software pricing and a way of going about it.

I think this is a vital topic to anyone wanting to break into the software market, and eventually trying to sell their software. I’ve seen far to many software products horrible overpriced and think they could sell much more by lowering their price a little.

But this depends on your target audience, if it’s individuals or cash strapped small companies or startups, charging hundreds of dollars for your software might not be the best idea. But if your targeting major enterprises, your fifty dollar product could probably sell for much more.

Neil touches on this pricing demand curve in Chapter 1, and provide a great basis for the rest of the book. Armed with some basic economic and target customer knowledge you can start to develop a cohesive pricing plan for your software. Neil mentions in chapter two that your software is more then just bits and bytes, and a nice GUI. Your product is documentation, support, development roadmap and so much more. In my opinion your product is also your company and the community surrounding your product, company or people.

In one of my Licensing System reviews I found a great licensing application called EZIRIZ IntelliLock. It was priced right, had the right features, but the company wouldn’t respond to my sales emails. If they can’t do that when I dangling money in their face what kind of support will I get when I bought the product and have a problem.

When your developing a product you should look at the marketplace and your competition. Figure out how much they charge and how closely the software maps to your product. But don’t analyze it in a vacuum, take into account the size of the company, it’s community and your perception of the value of the ecosystem around that product. Established products from larger well known companies can change more, even if your product is better you might consider selling it for less until you’ve made a name for yourself and your product.

Customers will compare, especially with the Internet. So if your selling your software more then your closest competitor you have to make sure you justify it to your potential customers with more features, better documentation, a larger community, etc.

As developers we like things round. So Selling software for fifty bucks even is great, none of those messy pennies flying around. But as Neil points out, fives and nines exert another powerful psychological effect on peoples perception of value.

Give Neil Davidson’s book a read and buy a physical copy if you enjoy it. You’ve spent tons of time designing and creating your product, now your only quarter the way there, now you have to market it, sell it and support it. Developing it was the easy part!