* The Business of Software

A former community discussing the business of software, from the smallest shareware operation to Microsoft. A part of Joel on Software.

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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

Article: Four Pricing Principles to Never Forget

Another nice article on pricing:
http://insideintercom.io/four-pricing-principals-to-never-forget/

It talks about SaaS, but the principles are in fact universal.
Dmitry Leskov @Home Send private email
Sunday, May 26, 2013
 
 
Good article.
I'm trying to keep my comments shorter.

1. Charge earlier than you’re comfortable with
2. Charge more than you’re comfortable with
This applies if you don't know your market.  If you don't know your market, go back to the beginning and get a deep understanding of what your potential customers really want, and more importantly, why they want that.  I don't agree with the idea that you can experiment on your market.  Computer software, whether it is personal or not, is a very mature market.  Lotus 1-2-3 came out 30 years ago, DBase shortly after that, mark-up based word processors for PC's about the same time.  You don't have anything new to add to this market.  Your opportunity lies with making existing software look like crap.  You don't get a second chance.  Charge less than what your software is worth to early adopters and dissatisfied users of current software because they need strong motivation to take a big risk and give you a shot instead of sticking with established solutions.

3. Justify (or kill) your lowest plan
Agree with this, you should establish a price for your base product that you can live with, and charge extra for extra services or features.  Maybe this isn't exactly what the article suggests, but I don't like tiered pricing structures, they assume customers are idiots.

4. Plan on changing prices
Also agree with this, because as purchasing your software becomes less risky you should charge more for it.  Your customers will complain, but when it comes to pricing, listen to their purchasing actions, not their self-interested feedback.
Howard Ness Send private email
Sunday, May 26, 2013
 
 
Thanks :)
Gautam Jain Send private email
Monday, May 27, 2013
 
 
On the subject of pricing, Patrick McKenzie's 2012 TwilioCon speech had some good tips:

http://www.kalzumeus.com/2013/05/23/selling-your-software-to-businesses-twiliocon-2012-presentation/
Nicholas Hebb Send private email
Monday, May 27, 2013
 
 
If you are *really* interested in pricing, there are links to 20 more articles on pricing (1 by me) under the 'pricing' section here:
http://successfulsoftware.net/links/
Andy Brice Send private email
Tuesday, May 28, 2013
 
 
Howard Ness wrote:
"You don't have anything new to add to this market.  Your opportunity lies with making existing software look like crap"

That is the take home for me. I agree with it completely. I think some of us of are still stuck in the past when software was really a new field.

My question is then how do you go about making existing software look like crap. People are usually reluctant to change from what they are used to.
codingreal Send private email
Sunday, June 02, 2013
 
 
I may be in the minority here, but I think there are huge classes of problems software has yet to maximize potential value.

Sure, many of the early markets are pretty well done as well as they probably ever will be- text processing, chat apps, etc.

but in my view, software will continue to grow, redefine old problems, and eliminate many more. We aren't yet at the stage where every new software product must grow at the expense of another existing piece of software, though many software developers seem to develop in that mindset.
Charlie B Send private email
Tuesday, June 04, 2013
 
 

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