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Sometimes it feels like writing software and creating good documentation - then finishing off a product with sample projects, demos, and installation kits - followed by creating a great looking Web site is the hardest aspect of the job for a software product creator. However, in many ways the most difficult task facing anyone who has just created a new product is to price it correctly for the worldwide market. How do you go about setting your product price? What factors influence the price you set? How do you move forward with your pricing model as you make new releases?
Many people publish a Product Road Map on their Web site so that their potential customers can see the future plans for the product they are thinking about buying. This is a good idea - as it shows those customers that your product has a secure future, with new features and functionality planned out for the next 1 or 2 releases in the next 6-18 months. Internally you should also use this product feature road map as a commercial pricing and licensing road map as well. When you plan your initial launch on the market you will probably start with a V1.0 product or possibly 2010 version... and start with a price that will make your product look professional and not like freeware. Say you start with a ProductA Std Edition V1.0 at $499, your internal road map may show plans to launch ProductA Std Edition V2.0 at $599 in 6-9 months time, along with a ProductA Pro Edition V2.0 at $899. Then when you launch V3.0 9-12 months after V2.0, you can create ProductA Enterprise Edition V3.0 at $1,499, with the Pro Edition at $999 and the Std Edition at $699 and so on.
With each release you will be adding new features and functionality, so the value of your product to a customer is rising. This means that you should follow this increase in value with an increase in price - to reflect the extra value and investment you have made in the product. You should avoid the temptation to cut price, special offers have their place from time to time, but remember if you cut your price by 50% - you have to double the unit or license volume sold just to stand still and equal the current sales that you are achieving. So valuing your product highly is important - as the license volume you sell may surprise you.
There are a lot of statistics available on the number of developers in the global software market suggesting that there will be 16 to 17 million developers globally by 2009, or that there are 4 million .NET developers or 4 million Java developers worldwide etc. ComponentSource has over 1 million registered Web site users and of those over 115,000 customers have bought a product license from us. This customer base has taken over 14 years to build. When you build a business plan, be careful not to assume that you will get a market share of 1% of 16 million developers in the first year - as if you do you will assume that you will reach and sell to 160,000 people in just 12 months - which is not realistic. This will cause you to set your product price to be far too low, as the assumption is too high. Try building a business model that assumes that there are 400,000 to 500,000 professional developers out there willing to buy your product. This means that a 1% market share will bring you 4,000 to 5,000 license sales and this sales level will take time to establish, as you will not instantly get to 100 or even 10 license sales in your first month of doing business.
So resist the temptation to price your products at consumer market prices like $0.99, $9.99, $29.99 or even $99 - as unfortunately you will not make it up with volume in this B2B developer market. Experience has shown us that your products need to be professionally priced in the $499 to $2,499 price range for a single developer or for a single server. Clearly each product and developer market niche is different - so if you would like specific advice about your product range and how to value it then please email: harryk@componentsource.com
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Our Holiday Season Offer is now on - with 20% discount available on all on-line Web, keyword & email newsletter advertising until Dec 31st, 2009. This 20% discount is in addition to the discount you already get as an Enterprise, Corporate, Professional Partner or product Author. You can book and pay for your product marketing now and use the adverts that you book at any time during the coming year - so you can use this offer to really stretch your marketing budget and reach even more developers and IT pros who may be interested in evaluating and buying your product.
More details can be found here:
https://www.componentsource.com/services/publisher/marketing.html
If you have any questions about this offer and your product marketing plans for 2010, please email: chrisb@componentsource.com |
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ComponentSource US News
We had some great meetings with our partners at the Microsoft PDC 2009 Conference in Los Angeles, CA last week. We will make sure we follow up on your product launch plans for 2010 with you after the Thanksgiving break. If you were not at PDC and wish to discuss your product plans for 2010, please contact Chris Brooke to arrange a call: chrisb@componentsource.com
European, Middle East & Africa News
It was great to meet everyone at the Microsoft Tech Ed Europe 2009 Conference in Berlin two weeks ago - we all watched the Berliners celebrate the 20th Anniversary of the removal of the Berlin Wall. Remember ComponentSource has helped remove lots of barriers that used to prevent you from freely selling your software across Europe. We have multi-lingual customer service personnel, pricing in 6 different European currencies, banks accounts in lots of countries to help people pay us locally - so that we can pay you! Contact Harry Kelly to discuss how we can help you in Europe: harryk@componentsource.com
Asia/Pac News
We have doubled the print run for our next Japanese paper catalog in Jan 2010 - make sure you don't miss out on reaching 10,000+ customers in Japan. Details can be found here if you wish to advertise your product - but you need to ACT NOW! https://www.componentsource.com/services/publisher/marketing-paper-catalog-japanese.html
Market News
Microsoft Acquires Teamprise Assets, adds cross-platform support to Visual Studio.
https://www.componentsource.com/news/2009/11/09/microsoft-acquires-teamprise.html |
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