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My startup is developing a mobile web application for an established enterprise ERP/CRM software package.

The software is essentially a mobile web application that is installed on the customers existing web server (we do not host the application).

We are unsure of how to best price the web app. Customers can range from 1-10 users, 10-100, 100-150, 250-500 and 500+.

Which of these scenarios would work best?

  1. Charge for web application software, then per user per month/year (e.g. Initial software $999, 10 users @ $50 per month). Includes support.
  2. No charge for software, just per user per month/year (e.g. 100 users @ $60 per month). Includes support.
  3. Single charge per year including support. 100 users $6000 per year.

The prices are just for example.

What is the best method for pricing our solution?

Note: Another company provides a very limited offline mobile app @ $100 per user total cost (no support).

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2 Answers

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There's a really good eBook on this subject by Neil Davidson called "Don't Just Roll the Dice". You can get it from http://www.neildavidson.com/dontjustrollthedice.html

Definitely worth a read.

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The best method is to find out directly from customers what they are willing to pay.

Failing that:

  • Your competitors seem to have hit on a price that is working for them so use that as a base
  • If you have a better product offering/customer experience then you should be able to charge more for the stock product than your competitior
  • Support is worth between 20-100% of your product price depending on what you are providing (e.g email, telephone, onsite). Support obviously increases with users so you need to have a per user fee in there.
  • You need to factor in your sales method, i.e if you sell via the web you can set a lower initial cost than you can if you sell face to face
  • Your customer sounds more like an enterprise user than a small business so a larger one off invoice is easier to manage than getting hold of a corporate credit card and billing that monthly. If they are smaller yearly is probably still easier but give them the option of monthly

I would probably have an install fee of 600-999 with 5-10 users included with a support cost of about 25% per annum on top. Extra users then 60-99 per unit depending on volume.

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