How to Price your software product

November 13, 2008 6:30 am 0 comments

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Ben writes a very comprehensive piece on strategies for determining the price of your product. Here’s the full article, and an excerpt is below:
Pricing Strategies to Consider

So what else needs to be considered when pricing software?

  1. Don’t make it a moving target. Pick your pricing and stick with it. Not forever, and not if you’re horribly wrong (but you won’t be!), but try and stick to your guns. There are ways of testing various pricing options without publicly changing it on a regular basis.
  2. Target specific markets differently. Different markets have different appetites for different pricing and different buying habits. Startups rarely pay for anything (for example), but you might still want to leverage startups for buzz, initial traction, etc. So segment your market, consider even verticalizing your product slightly, and sell at different price points. But don’t do it all in one confusing mess from your main corporate site. Think about implementing micro-sites and other marketing strategies.
  3. Limited time offers. There’s no reason you can’t offer lower pricing for a limited time offer. Or a special introductory offer. But don’t rush to lower your pricing at the first sign that things aren’t going well. It’s an obvious, knee-jerk reaction but it doesn’t guarantee success and can be perceived quite negatively.
  4. Don’t sell yourself short. It’s easy to worry about your pricing. It’s easy to worry about a lot of things…But don’t sell yourself short and cut away at the value you’ve built. In some markets, they’ll equate price with value, so coming in too cheap will send the wrong signal. It’s easy to convince yourself to sell too inexpensively (or give things away for free), but don’t do it without really understanding all the data and collecting as much information as possible.

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