Rudolph_the_Reindeer opened this issue on Dec 16, 2002 ยท 30 posts
doldridg posted Tue, 17 December 2002 at 7:32 PM
Reiss-studio, What marketing theory are you operating on? Last time I looked into it, the only things you should consider when setting a price are unit cost and demand elasticity. All other considerations, such as the capital cost of R&D are irrelevant. You will either make them back or you will not, but you will lose the least or make the most by pricing your product accordng to unit cost and demand elasticity. Now unit cost is the extra cost of shipping 100 copies more last month than you did divided by 100. You can factor in support costs (but need to estimate them accurately) but fixed costs like rent, power bills and regular phone bills don't count (long distance related to support might). The trick is to determine the elasticity of demand, which may take a trial sale price episode or two to fix and which probably changes a bit seasonally, too. But once you know the numbers, you can price effectively. I'm no genius, but I get the funny impression that a LOT of software is priced right out to lunch. And I often wonder why software manufacturers don't sell unsupported versions of mature products with support supplied extra (at a price).