Software Pricing – How to Price Your Software Competitively
Selecting a software pricing for your new program can be a hard decision. If your software costs too much, you may not sell many copies. If it’s priced too cheap, you still may not sell many copies. Additionally, you may not make as much money as if it was overpriced. If it’s priced free, how do you plan to pay for the man hours and work to bring your software to fruition?
Striking a balance between too little and too much or how to make free software make a profit is one of the hardest tasks facing a developer. The price per unit software varies beyond your personal preferences. Software price varies based on supply, demand, and to a great extent, reputation. More mainstream applications generally cost less than obscure and specialized software. Take for example, Antivirus software packages with one year of updates.
Trend Micro Antivirus runs $39.95 for the software, whereas Norton’s price is 39.99. Other packages tend to run comparably. A few AV programs are priced free additionally. So, using this example, if you were planning on writing an anti-virus application, your target price should be no more than $40.00 for Windows operating system software.
Any software you could possibly hope to offer that is priced higher than the packages you can buy in local retail would be roughly equivalent to market suicide – especially for a newcomer in a market that is largely centered on well-established heavy hitting players. So, the first step is finding comparable packages.
Once you’ve isolated packages that offer similar features, you can begin determining where your program fits in. One way to scale a price that is used by the Anti-Virus software manufacturers is to bundle extra services in, as part of premium content or online defense, or other add-ons. Similarly, you can tailor your software’s price to a base configuration, then offer premium editions and even student or demo editions.
This helps your price reach various income targets, while helping maximize the numbers of copies of your software you can sale for any given price. Another helpful thing to do as part of setting a price for your software is to assess whether or not it’s complex. Basic software often works well with a flat fee, whereas very targeted software packages can often charge a reasonable or even bargain price and make the real money through support contracts.
Even if you plan on making your software’s price free, you can still make money on the effort. Lots of programs are available for free with the purchase of a higher priced premium edition optional. These software’s can justify the free price through the inclusion of additional features. Most typically, features such as registration agreements with subtle wording allowing you to resell information to other vendors are used, although over the last few years, many free priced packages have taken an extra step, to begin adding third party software into the base package.
Using this method, when an end user installs your program, third party revenue is generated through information provided to the extra applications. Another fairly common step towards setting a free price for full function software involves bundling in advertisements. Then, whenever a computer is running the program and online concurrently, advertisements are displayed, using a reference id that links to your own advertising account.
Using tricks like these, a bit of studying, and being flexible with pricing during the initial phase of roll out, you can set a successful price to your software package. Just remember, that supply and demand are intrinsically linked when it comes to software price – but there are a lot of clones on the market, and you must justify your product’s price either through branding, advertising, or simply superior quality.
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