Hot answers tagged pricing
31
The short answer: You should bill each consultant out at 1/1000th (0.1%) of their annual salary.
First of all, congratulations on doing this as an hourly cost with a fixed number of hours. That makes your life infinitely better than if you had to do it for a fixed price and were spending the rest of your life arguing over what's INCLUDED in the fixed price!
...
26
Dividing salary by 2000 would be way too low. Consider for employees, nominal hours worked are 52 weeks per year x 40 hours per week = 2080. Those are the hours that a typical salaried employee gets paid for. But employees get paid for a lot of hours they don't actually work! Consider: vacation, paid statutory holidays, sick days, bench time, etc.
As a ...
17
No, it's not possible for you to "ruin the industry". Your business will not scale, and the total number of web sites you can handle is so small as to be neglible.
Your question implies a naive belief that the more expensive firms doing the same thing as you must be rolling in profits. That's simply not the case. There is competition between these large ...
14
There are various ways you can handle this. It really depends on how much you want to market and sell the product you will license.
You want to continue to sell the product
In this case, you need to ensure that you maintain the rights to do this. Some things to consider:
Which markets will they sell into?
What are the minimum amount of sales required to ...
13
If you yourself can be your own customer ("you eat your own dog food"), the number one piece of advice is, what would you pay for it.
At Inkling we've gotten in the habit of sticking in our own credit card to pay for using our own software. Yes, it's a bit silly when the credit card processing takes some money off the top. But it makes the feeling very ...
13
The first generation of "internet hard drive" companies (xdrive, idrive, etc) were based on the old LAN model of a file share that happens to live on the Internet. Accessing every file over the internet was slow, creating a ton of friction.
Dropbox provided true synchronization technology, so performance was fast and you could continue to work on files ...
13
In order to figure out how much it will cost, you need to know how long it will take. The amount of time a software project will take could vary from 1 day to 10 years. Even an iphone app could take that long. To estimate how long it will take, you need to have a clear functional specification. If you expect to go onto oDesk and eLance and say "I have ...
12
Testing is very important. In some markets $49.95 will beat $50. I know of a test that $10 beat $9.49 4 to 1!
In all things testing is perhaps the most useful thing a start- (or any other company, really), can do.
Testing separates the winners from the losers and continued testing separates the flash in the pans with long tern success.
What you will find ...
11
The PDF requires login information, so I couldn't look at it.
But I think you've made a lot of the same mistakes I have as a bespoke developer:
Neither party has worked in this kind of relationship before. So neither of you can say, "this is how things are normally done". In such cases, miscommunications and misunderstandings are to be expected.
You've ...
11
No, it is not correct.
Creating a product is just one small part of selling software.
Is your documentation as good as your competitors?
Is your installer as good as your competitors?
Does your product look as good as your competitors?
Is your domain name as good as your competitors?
Is your web site as good as your competitors?
Is your SEO as good as ...
10
I would recommend you consider pricing your subscription software without the cents but ending in 9. So in your $50 example . . . use $49. Ultimately, it really depends on the nature of the software solution you are offering, your overall offering mix and pricing structure and who your target customers are.
Value Messaging: It's not the price they don't ...
10
I don't understand why you can't offer both. In fact, almost all monthly recurring services with fixed monthly rates typically offer an annual rate including some discount.
The extra expense for monthly billing is significant for you because the total is so small. At e.g. $40/month the pennies don't add up, but on just $3 of revenue a charge of e.g. ...
10
Christian, I was a VP of marketing for major corporations for over a decade and can assure that starting high and going low is much easier than trying to raise your prices after the fact.
The exception is if you announce up front that this is a "one-time offer" an "introductory price" or some other qualifier. If you do that, then you must follow through ...
10
You have to pre-announce the price change for those potential customers currently trialing. Blind-siding is the worst thing you can do.
Here's the thing about raising prices: The only people who know you raised the price are existing customers. Everyone who comes to your website post-raise doesn't know it was ever lower.
So all you have to do is take ...
10
I assume your software is of a type were security is an important concern. In general, I would say:
Releases which only address security issues should be free. There is an old culture of free security fixes in the IT community, and if you don't adhere to this, your reputation will suffer.
It's OK to limit how far back you will backport security fixes. But ...
9
My favorites that I refer to often: LogMeIn (only recently public) and eFax (J2 Comm.). Both are premium communication services, and both have typically a 10:1 free to paid ratio, i.e. premium comm services convert well.
Zynga isn't public....yet. The virtual goods model is often a cousin of the freemium model.
BONUS ROUND! EFax free-to-premium ratios, ...
9
First, price isn't going to be the issue - service and reliability will be. So the structure of your quote needs to deal with that in such a way that you can alleviate concern on their part of what happens if your product doesn't work at a critical time (having no idea what your product is, I can't give a more concrete or relevant example).
I would give ...
9
Opinions vary, but I think one of the key ingredients in their success was the "it just works" factor.
Dropbox took a seemingly simple issue that people had struggled with forever (easy sharing of files over a network) and made it a transparent process.
I think it also helped that the service didn't also co-market itself as a shady way to share copyright ...
9
We already spent years of engineering work and price was the last issue we thought about.
Yikes! Well, we made the same mistake in my first startup, and I hope yours goes better than that did.
You need to figure out what it's worth to your customers, and price it accordingly. And as a marketer once told us in that startup (and we were damn fools not to ...
8
If the thing you're selling is undefined ("complex solutions"), then of course you can't price it. By definition?
But if you're selling software, there's some good reasons to post prices, the biggest of which is that you have a strong negotiating position, in that you don't negotiate.
"We need a discount" can be countered with "All our customers pay the ...
8
I think the key for pricing desktop applications is to make it as boring as possible. Don't try to invent a fancy new pricing model. Most users have set expectations for the cost of desktop applications these days.
The traditional model for business applications is to charge a licensing fee plus annual maintenance. It's pretty standard in the enterprise ...
8
It's pretty simple: those brands that are advertised so much are typically commodities, meaning they are pretty easily replaced by another brand's similar product. So they want to stay top-of-mind, so that when you reach for a soda, you remember Coca-Cola.
Beyond that, YOU may know Coca-Cola from seeing thousands of ads for it over your lifetime, but the ...
8
Great question. In my experience being upfront with pricing is always better, both on low-end and high-end products, even with 6- or 7-figure enterprise deals.
Here's a detailed argument for why.
The outline is:
It makes price "negotiation" trivial (you don't negotiate)
It's honest, which help the relationship
It's consistent with a confident ...
8
It's hard to give a good answer from the vague info you've posted, but I will share one piece of advice when selling anything...
Once you set your price it should be something that you are proud of and can defend easily and without resrorting to crazy examples. If you can clearly demonstrate that your software proves $2500/mo in value, then charge $2000/mo ...
8
Why not have the best of both worlds? Offer in-app subscriptions at $1.50 per month and yearly subscriptions via the website at $12. Don't offer annual subscriptions in-app.
This way customers don't see any price differences between the website and the app. All they see is that a month by month subscription is $1.50 and that you offer a better price for an ...
7
I would like to keep it simple. One pricing. But I may consider other pricing "weapons" to target international users.
Like
Offer a discount coupon code for international users that does both, attracts them and subsidizes their payments.
May be I'll come up with a pricing figure that serves all markets equally well.
Let them use it free but ask them to ...
7
ACC, I just dealt with a similar situation. First it's good you have a strong relationship with the client, so the goal is to keep it that way. Here are my recommendations:
Don't send the rate increase info in an email, too impersonal. I tried it, it didn't go too well (and mine was was only a 15% increase). Email is not the best way to communicate what ...
7
A couple of blog posts that you might find useful related to pricing.
QuickSprout: Customer Are Always Right, Except When They Are Wrong
OnStartUps: How To Price Software Without Rolling The Dice
Overall, Steve is right on. You can never raise your price on the same product. Having a tiered pricing structure is much better (Take a look at 37 Signals ...
7
Wait wait wait!! Is the reseller asking for the discount, or the customer?
If it's the reseller, then don't give any discount. I've sold millions of $ of enterprise software and never once gave a reseller a discount. They automatically ask and they tell you it's standard, but it's horseshit -- the customer has already approved the order if it's at the ...
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