How To Price Software Without Just Rolling The Dice

Posted by dshah on Monday November 23, 2009 @11:36AM
from the onstartups.com dept.

http://onstartups.com/tabid/3339/bid/11097/How-To-Price-Software-Without-Just-Rolling-The-Dice.aspx

( 10 comments | 65 points | on HN )

Re:How To Price Software Without Just Rolling The Dice by tptacek on Monday November 23, 2009 @12:35PM (#957741)

You probably get 80% of the value of all these posts with just two bits of pricing advice:

* Don't charge cost-based prices; what you pay to build something has nothing whatsoever at all to do with your price. All arguments of the form "that's just a (wiki|blog|bug tracker|reddit clone) with a * attached" are themselves a subtle form of cost-based pricing.

* Charge more.

I liked the book though.

[ Parent | on HN ]

Re:How To Price Software Without Just Rolling The Dice by access_denied on Monday November 23, 2009 @01:36PM (#957858)

Additionally, if you do b2b:

* Charge more.

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Re:How To Price Software Without Just Rolling The Dice by tptacek on Monday November 23, 2009 @01:38PM (#957860)

Also, at rev 2.0:

* Charge more.

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Re:How To Price Software Without Just Rolling The Dice by pchristensen on Monday November 23, 2009 @03:05PM (#958029)

In a recent Stack Overflow podcast (73?) Joel said that he would helped the world a lot better if he made a robot that you could ask about software pricing, and it spat out the answer "Raise your price by $200"

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Re:How To Price Software Without Just Rolling The Dice by pkaler on Monday November 23, 2009 @06:16PM (#958354)

It was the This Week In Startups podcast with Matt Mullenweg as a guest.

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Re:How To Price Software Without Just Rolling The Dice by pchristensen on Tuesday November 24, 2009 @11:35AM (#959477)

That's it - too many podcasts to keep straight. Thanks!

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Re:How To Price Software Without Just Rolling The Dice by mixmax on Monday November 23, 2009 @05:37PM (#958284)

I think there's a better way if you're doing webapps. Since you can change the price for each customer in the backend code you can actually start doing statistics and find out at which pricepoint you maximise your profit.

More info here: http://www.maximise.dk/blog/2009/01/getting-product-pricing-...

(Full disclosure: it's my own rarely updated blog)

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Re:How To Price Software Without Just Rolling The Dice by sheena on Tuesday November 24, 2009 @02:52AM (#958888)

It might be a better way in theory, but do you know of anyone who's actually employed the technique without severely alienating customers? You mention Amazon as a general A/B tester, but Amazon's price testing is the most prominent example I can think of and it ended with a public apology. Price discrimination (even if it's only a testing phase) only seems to fly if it's not obvious, and it'd be obvious for most webapps.

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Re:How To Price Software Without Just Rolling The Dice by pierrefar on Tuesday November 24, 2009 @07:09AM (#959089)

As I understand it, airlines can get down to a per-seat pricing structure. Look how much we love them for it.

There is a reason why Farecast did so well...

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Re:How To Price Software Without Just Rolling The Dice by sheena on Tuesday November 24, 2009 @07:51AM (#959112)

True. I didn't mean that some markets don't support price discrimination, just that customers' perception of it -- if they know it's going on -- is terrible. With airline tickets, people see prices fluctuating over time: lots of bumps but also some apparent connection between the time/effort involved with buying early and a generally better price. Customers seem to be more infuriated if they can easily tell that someone else is getting a better price on the same exact seat at the same exact time. Given the fluctuations and the expectation of fluctuations in airline pricing, there's not much direct comparison going on among airline ticket consumers.

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