Hi everyone,

excellent answers, this was very helpful! So many good thoughts here.

The main take away message for me here is that giving away won't build a brand, and that charging a price adds to a value of the application.

Aurelio: It's not about recognition of my skills. That is included in the PhD title. :-) Now, it's about recognition in the business world...

I like the idea of a free version and a more complex premium version one. Will read the book on pricing software, which Matt recommended.

Thanks to everyone!

Mila,

1. I'm not a big fan of giving away applications, having gone down that same road with my first microISV product. While I ended up with approx. 50K users of the free app, I would have been far better off selling it to 5k for even a nominal price. Selling your software means you can support it properly, and I've yet to see a 100% support - free app. What matters is the time your customers are investing.

2. Start by doing a private beta with every friend you've got and get some feedback on the value they derive from you app. If they say (see google app forms for an ultra easy online survey, and a private google group for support/forum) "Your app is saving an hour a week" that gives you some idea of it's value, and what a fair price for it is.

3. You can certainly build your brand/reputation via starting/contributing to Open Source Projects, or by creating or selling a small but highly useful app. But I don't see giving away a presumably valuable application - and supporting it for free - as brand/reputation enhancing.

If people need to try it in order to understand its value, then you can offer a trial version (say, 30 days of unlimited use, and then you pay). That way people know what they're paying for. Alternatively, you can have a free version of your software which you don't charge for, and a premium version that has extra features, or unlimited usage, etc.

In order to figure out a price, though, you need to know if you can charge a one-time fee, which may be large, and thereby discourage people from putting up the money, even if it is worth it, or if you'll charge a smaller membership fee, but it will take you longer to reach the same dollar value per customer. You may want to mix the two, and offer both options. It would depend on what your software is, and how well it lends itself to either model.

I suggest you get in touch with someone from a business background to help you with this. If you are planning on turning this into a business, it's only a matter of time before you'll need such a person anyhow - you spent years getting your PhD in Computer Science which allowed you to build your application, but it didn't train you to market or sell it, nor to build a business. For that, find someone who knows how to run and build a business.

First of all good luck with your app!

To charge, or not to charge. THAT is the question in the software industry. Before rationalizing what makes more economic sense, think about what would make you happy? Even though I don´t know exactly what your product is, consider whether giving it away for free would produce more satisfaction, more gratification, than say $500,000. It may sound ridiculous for many people, but hey, PhD in computer science are a little bit weird and some of you want RECOGNITION rather than monetary compensation.

If you go for recognition, you will also need a strategy so that your app reaches as many users as possible. But remember, you are not going to build a brand by giving away something for free. It takes way more than that (unless your app is the next Linux).

If you go for the money, I think your best chance is simply to sell the tool to a big software distributor, or maybe even Google, or Microsoft. They have the distribution channels in place to reach vast numbers of businesses and private users.

Take care and good luck.

I'd recommend reading this for pricing question: http://onstartups.com/tabid/3339/bid/11097/How-To-Price-Software-Without-Just-Rolling-The-Dice.aspx

In terms of whether or not to give away your product, I would recommend charging at the start. Since you're mainly selling a service that is fairly objective (eg. people should be able to grasp the concept easily), people should be able to understand the value. One philosophy I have seen is "charge early, charge often." I've worked with a startup that was offering more of an abstract service and thus first released the product for free to get feedback, then eventually moved them all to paid accounts (but didn't charge them). I think you should start charging right away, though.

In terms of pricing, I'd be interested to more about the text app. I'm friends with the CTO of a company that has a pretty solid text messaging platform, but they might do something different. They charge based on the amount of text messages sent per month. I think the carriers charge them that way, if I had to guess.

Things like testimonials and case studies can help build credibility for your service. If you'd like to build a customer base, I'd look into forming strategic alliances with other communities targeting similar audiences you're after. Possibly offer them a discount or something as an incentive.

I'd love to talk with you more about this if you'd like, feel free to contact me through my site. Good luck, and let me know if you have any more questions. :)