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What price will the market bare is a fancy way
of saying, how much can you charge for something
and still sell a reasonable quantity. The trick
is to charge the highest dollar amount without
diminishing the volume of the units sold. This
will allow you to maximize sales.
Business owners often have a skewed perception
of how much they should charge for a product or
service, and unfortunately there is not an easy
formula to find the "right" price to charge.
Business Applications
Software Developers of business applications should
consider the following when determining the price
points of their business applications.
1. Frequency of Use
How often is the program utilized? The program's
frequency of use can influence how much you can
charge for an application.
2. Support
What is the level and ability of support that
is provided with the software? Large companies
are often willing to pay a premium for superior
technical support. In fact they are often willing
to pay more in order to receive priority support.
3. Competition
How many products are competing for the same market
space? To some extent market saturation will dictate
pricing. It is very common for a "full" market
to create a price war, driving prices down. The
complexity of the software may diminish competition
as it will take longer for "clone" product to
go to market.
4. Integration
What is the software's ability to integrate and
interact with other applications? The flexibility
and complexity of a program can significantly
increase its value.
5. Need vs. Want
If the application serves a genuine need, or can
demonstrate a cost savings, a productivity increase,
or time savings the value of the software intrinsically
increases. Unlike a "fun"" application an application
that can clearly show a savings, whether in time
or money can show that using this application
will result in a cost savings over time.
Ultimately customers will be willing to pay what
they believe a product or service to be worth.
More often software developers defer to value
based pricing which refers to what the market
will bare. The perception of the product's value
is an important component in value based pricing.
Alternative Resource for Pricing Software - Eric
Sink's Pricing Guide
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Understanding
Purchase Orders
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Developer
101
Pricing Business Software