Software Pricing Policies and “Robert’s Rules”

The pricing of software products is an art, and most vendors live in constant fear that they’ve left money on the table, or the opposite – that they overcharge and drive customers to competitors.  In many cases the fears should be attended to, as pricing is often incorrect.  The trouble is that pricing cannot usually be dynamic and customers must be advised about price at some point in the sales cycle.

In no particular order, here are “Robert’s Rules of Software Pricing – But You’ve Heard Them All Before”.  This is extracted from a discussion at the York Technology Association led by Robert Wolfe.

  1. Increase prices with major upgrades only.
  2. Preferential prices are a slippery slope.
  3. Creating an innovative pricing model requires deep pockets.
  4. Free is always tough to convert to paid.
  5. Always seek scale economies.
  6. Gain margin from efficiency increases, not from price increases.
  7. Give salespeople rules and reward them for holding fast to the rules.
  8. Trade price for contract length (recurring revenue).
  9. Throw-ins cost more than planned.
  10. Never forget good contracts.
  11. Price complexity leads to failure.
  12. Make certain to factor in the cost of development.
  13. A software price war always has a loser.
  14. Don’t charge for experiments, the customer will come back for more and pay later.
  15. No such thing as a cash cow customer – but delighted customers can be depended on.
  16. Customers should understand their ROI.
  17. Price to value.
  18. Always, always, take the long view.

We’re sure you have more suggestions – please comment.  If you’d like advice on pricing please call 1-888-277-1174.


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