In my company we often value the software to be almost the same as concurrent software on the market. While this is one way I'm interested of other (maybe more academic) ways of value and put a price on software.
Any ideas or methods that have been succesful for you?
While I'm not always a fan of Joel, this crusty old article from 2004 answers your question very well. You charge based on how many units you think you will sell at that price, with the goal of maximizing profit.
I've done some contract work in the past, and I based my estimate on:
Then I compared that to the industry standard. In my case it was usually cheaper, and I still made money. Thus both the client and myself were happy.
Edit:
Mind you the above method is for a single client, with a custom software solution, and a simple unlimited-use license.
If you want to know academic methods for pricing a product, I have an MBA I would like to sell you.
Seriously, it depends on a lot of things. Are you selling a service, subscription, or a "box"? Where is your desired position in the market? What do your customers have to spend?
Listen to your customers and be prepared to change your pricing strategy. If you ever hear a customer say, "Wow, I was expecting to pay more!", it may be time to raise your prices significantly.
Magsto, my bet is that this question will be closed pretty quickly as being "not programming related."
However, I will tell you that your question is quite a bit more complex than can be answered here. There are lots of factors including time in market, market size, ROI you can offer, competitive advantages or disadvantages, the structure of payments (credit card, purchase order, cash), and even time of year. I only have experience here because I run my own company.
Do you really want to ask programmers this question? I think not...
I value my product as a fraction of it's value for the client. My venture sells web apps so it's slightly different, but if a web app would streamline 75K worth of overhead out of an office's budget, I charge 25K for it.
If it's a one time sale you have the option to examine the client and what value it will deliver to them. If it's a publicly sold product, the options are very different.
The basic formula is to sell it for around 30% of what it's worth to clients/end users. If you can deliver better quality than the next company, pricing in step with them is a big mistake because you can make more and take a better market share by promoting the features that justify the cost.
Customers often perceive cost as equal to quality. If you want to position your product as the highest quality option, you might consider pricing at 20% more than other competitors.
The price of a product is just as much about market strategy as maximizing profit.
I am a IT enterprenuer and I my venture is into web and application development domain. When we deliver any product to our clients we ask them that -how much time they are able to save with our application in place. -Then we ask them to value their own time. Ex how much do they make in an Hour -Then we do time saved * value of time (as per the client) these is the value that turns out for one day. We do the similar computations and demonstrate them how much they save in month and in a year
Thereafter depending on the client and the result for monthly and annual saving we give them the final price quote.
We think that these is the best way to give a software pricing as in these process we are pricing the software as per the money that software is helping our client to save
I have looked around on net and these book was suggested on almost all the forums though I have not personally been through these book but here is the download link
You might want to read this:
Securing a .NET Application
It's a bit long, but I do get into some pricing at the end.
