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Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

Rasing prices

Our main product is currently priced at 19.95 USD.

While the price is listed in US Dollars, all of our costs and day-to-day living are in Euros. The dollar gets more and more worthless every day with no end in sight, and we are to a point where we must raise prices.

We have a new version coming out in a few weeks but it is just a x.0 -> x.1 update, albeit with some new features.

We are thinking about 22.95 or 23.95... *maybe* 24.95 tho I think that might start to push the limits of what our customers will tolerate. I think 22.95 sounds like $20, but 24.95 sounds like $25.

Thoughts?

We've never raised prices but the falling dollar is killing us and Americans are not happy paying in Euros.
Anon
Saturday, May 12, 2007
 
 
I have just put up the US dollar price of buying my software on CD by $5 to allow for exchange rates (download price stays the same). It will be interesting to see what effect this has on the ratio of download to CD sales for US customers.
Andy Brice Send private email
Saturday, May 12, 2007
 
 
I am considering posting a letter to our site explaining the reason for the increase... in the last 5 years, the USD has gone from being worth 1.15 Euro, to just 0.75 Euro today... a drop of 35%.

A 35% rise in our price would be 26.95, but we sould not raise it so far... maybe to just 23.95. See what nice guys we are?  :-)

Do you think Americans will understand that their currency is not worth what it used to be?

We have a US address and many people may think we are 100% US based so we need to explain this I think.
Anon
Saturday, May 12, 2007
 
 
Raise the price - we all need to at the rate the dollar is falling!
rxs
Saturday, May 12, 2007
 
 
You won't know until you try, but I certainly wouldn't start explaining the price rise, or writing about the weak dollar on your website - people don't want to know that their country's currency sucks. Put the price up, see what happens, and if your sales drop too far, reduce it again. That's all you can do.

Like many of us, I've played around with pricing a lot. I found that for my product there was a very clear $30 limit. Go above, and sales dropped off substantially, 5 cents below and everybody was happy.

And yes, there is a big difference between $29.95 and $30. I didn't want there to be. I thought people really were smarter than that. But they're not.
Bill Send private email
Saturday, May 12, 2007
 
 
Tough decision.

Maybe gradually introduce the price increase. For example, indicate somewhere on your web site that the price will be increasing as of the month of X.

Do you know what your competitors charge? If they are all $20 or less, it may be risky. If they are at the price point you intend to raise your price to, then you need to ask yourself - are my customers buying because my price is lower, or because they like our product better?

If you absolutely positively have to raise your price, do it gradually in $1 increments. increasing a dollar every month or two until your sales start to go down, or, until you have reached your desired price point.

Pricing it perhaps one of the toughest things to do in a small business. Good Luck -
OneNerd
Saturday, May 12, 2007
 
 
We have only one competitor and it is a free product... we do take some hits from people that say "I can get product X for free" but nothing we can do about that.
Anon
Saturday, May 12, 2007
 
 
Wait until they start trading oil in Euros. Wait until China decides it has enough trillions of greenbacks...

eep
mynameishere
Saturday, May 12, 2007
 
 
It certainly depends on your market, but for what it's worth, just two months ago I raised my prices by 80% and saw no decrease in sales (and an increase in profits significant enough that I'm almost able to support myself now ;)).

Don't be afraid to experiment. You can always change it back if it doesn't work.
Denis Dmitriev Send private email
Saturday, May 12, 2007
 
 
Hi,

I raised my price last weekend from $99 to $129 and I've had the worst week in about a year. I didn't think it would make such a big difference but it did :-(

I'm going back to $99 I have to as my sales are down by over 50%. I know I may offend a few who purchased this week but its not many! I'll offer to refund the difference if any customers get back to me on it.

I sell one product at $49.95 and one at $99.00, I was thinking of listing my prices in just two digits $49 and $99 as I suspect this may look better. Maybe you could try $23 rather than $22.95 which is longer but cheaper. Just a thought.
Steve
Saturday, May 12, 2007
 
 
>>
We are thinking about 22.95 or 23.95... *maybe* 24.95 tho I think that might start to push the limits of what our customers will tolerate. I think 22.95 sounds like $20, but 24.95 sounds like $25.
>>

Jump straight to 24.95.  I have fairly little resistance at that price point and my customers are almost legendarily tightwads. 

I also don't think pricing increases requires an explanation, particularly not one which references currency fluctuations, which confuse many people.  (And if your customers care about the difference between $23 and $25 I'm going to somewhat uncharitably guess that they are not extraordinarily experienced in the ways of international finance.)  Prices go up all the time, folks understand that.
Patrick McKenzie (Bingo Card Creator) Send private email
Saturday, May 12, 2007
 
 
Supply and Demand my friend.  You may not like our currency conversion, but you like to get our currency none the less....right?  There is a correlation between your price and our demand of your product.  If you raise your prices, it will cause the interest of those, whose price tolerance for your "utility" is on the low end, to wane.

I would tend to not bet against the dollar..it has traditionally been strong, and when the current political/world turmoil has waned, it will become strong again.  I would give it a matter of just a few years personally.  Especially against the euro as I believe (not proven fact or knowledge here) that the US by and large has a larger economic output potential than the EU member countries.  In the long run..it is economic output, inflation, and long term politics that affect the price of currency.
USD Send private email
Saturday, May 12, 2007
 
 
--
but you like to get our currency none the less....right? 
--

Umm... actually, no... Sure it is better than some, but the USD has been falling against every major (and many minor) currencies for years.

Our USD from sales is converted to Euros as soon as possible and we would charge in Euros for everyone if Americans as a whole were a bit more educated and realized not everyone uses dollars.

The USD has dropped continuously since the introduction of the EUR and while there were times when it rose a bit, the trend is only downward. With the US trade deficit and rampant borrowing, I'd rather not be in dollars at all.
Anon
Sunday, May 13, 2007
 
 
BTW: Our sales by region:

US:    44%
EU:    23%
Other: 33%
Anon
Sunday, May 13, 2007
 
 
"Umm... actually, no... Sure it is better than some, but the USD has been falling against every major (and many minor) currencies for years."

Actually...I was refering to our money...so in other words... "You like to get our money."
DanH Send private email
Sunday, May 13, 2007
 
 
"and we would charge in Euros for everyone if Americans as a whole were a bit more educated and realized not everyone uses dollars."

"US:    44%"

Educated?  Wow...for someone who is posting anon you sure are acting brave.  If you hate americans so much, why don't you post non-anon so us un-educated Americans can be sure to not bother you with currency conversion at all!  Oh wait..you wont do that since 44% of the life of your business is from us...or will you?
Tired of Ameri-haters Send private email
Sunday, May 13, 2007
 
 
People don't care why your profits are falling - if they're going to give to the needy they'll donate to charity instead of asking if they can pay a bit more because of the currency conversion rate. Your terribly sad story of deprivation and woe and 17 starving babies at home isn't going to get sympathy.

Sunday, May 13, 2007
 
 
"I raised my price last weekend from $99 to $129 and I've had the worst week in about a year. I didn't think it would make such a big difference but it did :-("

Try $199.

You'd be suprised.

Sunday, May 13, 2007
 
 
Wow... the OP says he'd rather not have USD in the bank and all of a sudden he's burning the American flag?

Grow up.
Frank
Sunday, May 13, 2007
 
 
"Wow... the OP says he'd rather not have USD in the bank and all of a sudden he's burning the American flag?"

If he would have left it at that, I would agree.  I believe it was his post, dripping with disdain, regarding un-educated Americans that refuse to pay in Euro's which pushed me to that conclusion.
Tired of Ameri-haters Send private email
Sunday, May 13, 2007
 
 
In follow-up, unless the OP is German, he has nothing to brag about as it is almost solely the Mark which has underpent the EURO's credibility and strength.
Tired of Ameri-haters Send private email
Sunday, May 13, 2007
 
 
Just put the price up.  Prices go up from time to time.  Putting the price up by $5 isn't going to upset anyone.

Regarding the USD exchange rate, there are a number of ways to look at it.  There's no need to start an argument over the strength of one economy compared to another, or how well educated that country's citizens are! 

The fact is that exchange rates go up AND down.  I started in this game 10 years ago.  Back then I got more pounds for my dollars than I do now.  But my attitude is that that was a bonus.  There isn't really a "normal rate" - we're operating in a constant state of flux - and therefore you can't really compare today with 10 years ago as if then was normal.  In 10 years time the situation will be different again.  Plus in each passing year your sales volumes (should) increase, so if and when the situation ever goes back to the levels seen 10 years ago, well you're just going to have a bigger smile on your face as you sit and compare back to now.  If you were to switch currencies now all you would do is create a short term improvement - when the rate becomes more favorable you would then be losing out from the relative exchange rate gains.

If you switch base currency to the Euro you'll just create a situation where the price for your largest market will get higher and higher each day (at present).  Better in my view to have a price that is stable for the larger part of your market (or several stable prices - prices set for each currency/market).  At least then the end user sees the same price each day.  You must weather the storm yourself rather than put the burden on your customer.  You will come out of it stronger.

In short - try not to view now as bad.  Back then was just better than it should have been ;-)
Marcus Tettmar Send private email
Monday, May 14, 2007
 
 
I'll gladly accept dollars, please send them to me@dollarmad.euro
DollarMad
Monday, May 14, 2007
 
 
Tired-of-Ameri-haters: I don't hate Americans (my Wife is even American and we have family there)... but it is quite true that they don't really understand foreign currencies as a whole. Europeans have fewer problmes dealing with foreign currencies than Americans and are more "worldly" in general... probably because European countries are smaller and have more foreign interaction.

I think if your business/life was based outside the US, and the US currency was falling so fast, you'd be concerned too.

We are not talking about a small drop here. against the Euro, the USD has fallen 35%-50% against most major currencies in teh past 5 years. This is a serious trend and make it hard to plan...

Falling by 50% means everything is 50% more expensive: rent, ISP, salaries to our employees, license fees which are set in EUR.

Please don't accuse me of hating Americans just because I am seeing a 35-50% drop in real income at the same revenue volume.
Anon
Tuesday, May 15, 2007
 
 
PS: If "Tired of Ameri-haters" studied the historical situations in Turkey or Argentina with a falling currency, I am sure he'd understand. While the USD is not yet in the same position as the Argentine Peso was, it is a worrying trend.

I am sure if your income was in a weak currency vis-a-vis the USD you too would be concerned.
Anon
Tuesday, May 15, 2007
 
 
I wrote an article on how to price software at my blog.

It might help you if you're thinking of raising or dropping prices.

http://www.wptextads.com/blog/2007/05/11/how-to-price-software/
Alex Choo Send private email
Tuesday, May 15, 2007
 
 

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