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Wed, 09 Aug 2006
The Price You Pay
My initial pricing strategy was to price my software cheaply: that is, less than $10. ($6.25, to be exact.) My theory was that this would provide a low barrier for folks who would download the free version but might hesitate about paying. That seems to have worked so far: I'm getting decent sales of my first program, Port Authority. After reading the various arguments in the thread, however, I had initially decided to raise my prices to $20. I even released VuMan at this price point. A few hours later, however--after seeing a complaint that the software was overpriced and, more importantly, recalling why I had initially decided on a lower price point--I lowered the price back to $6.25. This afternoon, I got my first sale. Coincidence? Perhaps. Perhaps I'm leaving a lot of money on the table. But I don't think so. VuMan, like the other applications I develop, is open-source, can be legally built and distributed without paying me, and was formerly promoted as a free-as-in-beer program. All of its competitors are still free-as-in-beer. So, if nothing else, an economic analysis of this particular product's market niche shows that there's a lot of downward pressure on prices. In short, at $20, I was likely to price my program right out of the market. At $6.25, it might be a little on the high end compared to zero, but it's still competitive. My example may not be relevant for everyone. If you are trying to build a business around proprietary (closed-source) applications, then it probably makes sense to charge as much as the market will bear. Actually, I think I'm doing that also--but my market won't bear very much. If you are building proprietary applications, there is probably a lot of other kinds of overhead that have to figure into your price as well (the cost of icon designers--I use open-source icons; Google adwords--I don't advertise; and so on). So, as long as I'm working in the open-source vein, my prices will likely be low. If I ever learn Cocoa well enough to release a program in it, perhaps that will change.
VuMan 1.0
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