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5 Don’t-Miss Angles for Pricing a New Software Product | DevPro Journal

You saw a need in the market. You developed a brilliant application to solve the problem. Now, what do you charge for it? Pricing a new software product can be a tricky thing — especially if you’re a normal, red-blooded entrepreneur and you want to maximize your income from it.

You’ve probably heard that you need to set pricing based on perceived value, not necessarily on your time or other costs to produce it. Liz Lemarchand, Chief Operating Officer of ISV marketing agency MediaDev, says, however, she struggles with that idea, because there’s so much more involved with a pricing strategy aimed at reaching your business goals. Here are five things she says to consider before you set the price.

1 Your endgame
With the excitement of launching a new product, you may be telling yourself it’s too soon to think about how you want to be positioned when it’s time to sell your company. But it’s not. Pricing a new software product can make a big impact later. “What investors want is market share,” says Lemarchand. “They want to see a viable product and a positive response from the market. That tends to put pressure on the ISV to keep prices low.”

She points out that if you have a more elaborate and sophisticated solution designed for a specific space, you may be able to charge more. However, if a competitor charges less, they may be more attractive to investors. “You could be wiped out by someone who makes a different choice,” Lemarchand says.

She comments that at least for the next 18 to 24 months, there will be ample opportunities for ISVs with proven products. “There is so much money pouring into the market, but investors are struggling to find good investments. The number of good IPOs is low compared to the money available,” Lemarchand comments.

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5 Don’t-Miss Angles for Pricing a New Software Product – DevPro Journal.

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