Tell me more ×
Answers OnStartups is a question and answer site for entrepreneurs looking to start or run a new business. It's 100% free, no registration required.
up vote 4 down vote favorite

So I found pricing information on the established leader in the market my product serves - HR Software.

They don't show prices on their site so I thought I'd google to see what I could find.

Theirs is a web based solution and mine is desktop though my next release (due out shortly) integrates with the web.

It's listed as $60,000 per year. They also provide consultants for implementation etc.

Bearing in mind that these guys are the equivalent of SAP in the ERP market and I am an unestablished 1 man band, how can the pricing for a desktop version of this type product be best calculated?

My product's been around for coming up 2 years and with the next release I believe I'll have the core functionality completed. The upcoming new release gives me a good opportunity to correct my pricing.

The goal is to offer a reasonable price and not frighten people who are used to these big numbers by saying something like "$29.95 and free upgrades for life".

So far my sales have been pretty hands off. Customers find my site they download the free trial, they try it, they may call me or drop me email with an enquiry and if they like it they buy it with a credit card on my site or send me a cheque/transfer cash.

I don't make any sales calls though I'm sure the big guys do. I should like to keep it this way at least for now.

I want to send the right message with my pricing as I feel some prospects are put off by my current prices (sub $2000) but I don't want to be bogged down filling in RFI's.

How can I best balance these objectives?

Would appreciate your thoughts.

Many thanks

Volya

share|improve this question

1 Answer

up vote 3 down vote accepted

I have similar thoughts about pricing and there is no recipe. $60,000 per year is not a reference point to start to estimate you pricing strategy. You are not established or you provide all the things that you big competitor provide. It is probably better to find competitor of you size and compare pricing or somehow ask you customers what they are willing to pay for the product. Also, there are big opportunity to create pricing model based on usage and features (per processor, per products, etc.). I recently found a company (competitor) that sales work force management product, where the price of a product is based on number of workers that are managed. This gives me some new ideas of pricing that i haven't thought before.

About desktop vs. web application equivalent products, my thoughts was always to think about a web application product as leasing with 2-3 years term of the lease. Term can be the period for which the application with current version becomes obsolete. For example $2000 product (neglecting the interest rate) would be something like $83/month (2years)+expenses for hosting web application. This probably apply mostly for non computationally intensive web applications.

share|improve this answer

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.