I have a small startup that developed a software program. I've copyrighted the software and am working on patent protection, and I've started some marketing. It has been a very low-cost effort so far, and so the revenues I need to break even are low.
After developing the program, I discovered several competitors. The programs that we all have are helpful programs for members of a specific profession (like doctors), and the competitors charge $100+ for their versions. (I haven't bought or even done much examination of the competitors' programs, but at first glance they seem like good programs that do more than mine, but not much more.)
If marketing doesn't result in strong sales, I'm thinking about either just giving away mine for free (through various routes) or charging just a tiny sum for a download, like 99 cents. The competitors are more established than I am and have more visibility in the marketplace; I figure that the market for our programs is large but mostly untapped, so a large number of 99 cent sales (or free downloads, with various ways of earning revenues in connection with that) could be just as profitable as a small number of higher-priced sales.
If you were one of the competitors, how would you respond? I am pretty sure that their investments in the programs have been far higher than mine have been, although their ongoing costs may be low, but not as low as mine are. If they had to match me on price, I'd think that they'd lose money and their initial investment would go to waste.