Pricing Software

In my new gig (VP of Engineering at Vitals) I have once again gotten involved  in some of the pricing decisions.  It has gotten me in a new round of thinking about the strange world of software pricing.  That fascinating fixed up front cost and nearly zero incremental cost.  

At Vitals we are really working to change one of our core set of offerings to move from lots of custom work to a real standard platform.  Obviously our customers will get a break (and a more vibrant evolving product) but ~how much cheaper~ will we offer it at?

You need to be acutely aware of the chasm when you are selling B2B software.  Either it costs 100k+ plus maintenance and you might be able to afford the long involved complex sales cycle of larger organizations OR you price it cheaply (1k or below) so individuals can try it out within their own budget and carry the flag for you.  In between lies danger and frustration.

Here is some classic wisdom on software pricing. If you haven’t read it, take a look.

http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html

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