How do I set a price for a new software product?
I have developed automation tools for social media. I am now looking to price these tools and promote them. How do I go about determining a reasonable price? Should I test different pricing by changing the pricing once it is set depending on results?
Pricing in software is a somewhat diifcult exercise. Often you have to go through a discovery phase before you get to the right level. If similar tools exist, you can take a cue from them and position your product higher/lower depending on the relative value they bring to the user and pricing strategy you want, low cost high volume or premium positioning. Also you need to factor in geographic factors of labor costs, productivity standards and the ROI expectations. If product is one of a kind, you could apply some common sense and start high and you can be sure the customer(even the first one) will beat it down to a level that may be comfortable.
If the market for the Software is very limited because it may be a very niche you may want to look at the ammortisation cost before fixing a price.
Well...Where are your users located and what kind of a benefit are you giving the user?
1. Geographical is important and the relevance of the app or service you are offering. 2. Value for money.
3. If it's a generic app will you be converting USD to whatever the local currency is?
4. How much support is needed in setting it up using it?
5. What is your liability...how much will it cost you and your family if you have subscribers and it fails.
Good Luck and keep us posted
Hi,There are different ways to fix the pricing its hrs of dev x no of people + profit. The floating license and fixed license is the effective way of quoting and getting the best ROI on the software.
15-20% below the competition for a set time (3-6 months) then slowly raise the price to target. By the time you are using the regular price you should have a large client base.
Consider reading the Advertising and marketing Pricing guide for 2015 from AIGA and the American Graphics Guild. Excellent resource.
1. Look at your target market.
2. Calculate the amount of money you have and will be investing in production, marketing etc.
3. Plan your business model and consider what you want your return on investment to be.
1) Benchmark against existing solutions to find your customers "comfort zone".
2) Have a clear idea of how much you need to sustain yourself. Divide that by the number of customers you can expect to acquire in the next six months, and that is your initial pricing.
2) Price yourself as high as you can and start with launch discounts. Gradually lower you discount until you find the point at which customer acquisition drops.
If a industry trade show is in the near future that is one of the best bangs for the buck networking and market analysis opportunities available.
Quick advice. You need to know which price your clients are able to pay for your solution which supposed to know your add value. In other words: Which value is brought to your client and what is the value perceived by your client and he is ready to pay for? To answer this question you need, with your MVP (Minimum Viable product) to test several price ranges to several customers, starting from the higher price range. Thus, you test your clients expectations and will learn how to place your solution in an attractive add value proposition. 3 strategies:
1- Premium proposition: a high add value proposition for a high price.
2- Economic add value proposition: a lower price than your first competitor for the same add value proposition.
3 The low cost model: offer a lower add value proposition for a lower price.
Hope it helps.