Hi Everyone;
Ran across this in my daily "Lockergnome Windows Daily'.
THOUGHT... Sell previous version for HALF PRICE & current version for regular price. Might pick up a few more sales. ?
READ ON FOR THE COMMENTS...
Today, Bob Wallace, one of three persons credited with coining the term "Shareware," passed away. It's only fitting that I include this recent e-mail dialogue between Jake and a subscriber (Rick) in this issue. This long-time Gnomie responded to a post that was made in our Bits & Bytes regarding the Shareware industry: "I think it's unfortunate that shareware, and for that matter, software authors have not yet fully grasped the concept of supply and demand. It's Economics 101 - the lower the price, the more the demand. Your goal as a company or producer of a good is to hit a price as close to the crossing of those two lines while still making a profit. At a lower price, you SHOULD be able to 'make it up in volume.' I don't doubt piracy hurts everyone, from Microsoft to EA to the basement shareware author. Unfortunately, when Microsoft charges $550 for Office XP or EA charges $50 for 'Medal of Honor,' they fail to realize that they're pricing themselves far too high for Joe Lunchpail. Even the small guys are frequently looking for a price that's far too high for the perceived value of the product - and they don't realize that cutting their price in half might triple the amount of purchases."
Jake immediately responded: "A valid point on one level, but at the same time, there's plenty of economics that go into the pricing decisions for the companies you site. Based on stats of past sales, companies like MS and EA can forecast, with surprising accuracy, the number of licenses they will sell at various price points. They then figure out where the price / volume ratio is as close to their target optimum as possible and then set the price, knowing that after a certain number of copies are sold to those users who can't wait to have the latest and greatest, they can always drop the price in the future. Setting a price higher than most people would pay and then offering the product for 50% off even has advantages from a psychological impact. The entire retail clothing industry (outside of a select few elite brands) is based on sale prices moving product."
Rick: "I agree with the 'price high, cut low' model - but when do they do that? A year after the game or software has been released. Most shareware items have been the same price since their release, unless a newer version is released and older unsupported ones become free or discounted. While I acknowledge that pricing isn't done with a monkey and a dart board, these software companies have been using the same pricing model for years and years - well before true piracy became a viable option for everyone's mom and dad through the Internet. In the old days, you had to know someone or have a friend if you wanted software for free. Now, I go can go to Download.com, take 10 minutes to download and install KaZaA, and the world is my oyster. The times are changing - I firmly believe the economic models of yesteryear aren't working right now, and pointing fingers at the users or making installations difficult for even paying customers is NOT the solution. Making the product affordable so the effort in dealing with spyware, buying CDs, downloading, etc.. becomes negligible is probably a more valid option."
Jake: "We try and motivate every shareware author advertising with us to offer some form of discount, because most of them have no clue about marketing. The problem many authors face is they are one or two person operations - with skills for development and almost no business sense whatsoever (not that I claim to be a business expert). Attending the Shareware Industry Conference for the first time was eye-opening. Most of the really good shareware is created by people with vision for a product who desperately need assistance in getting that product in front of users. The conference is designed to help get them more info on how to operate as a business, but from an outsider's perspective (I don't develop for a living). Quite a bit of the information is really bad; the companies cited in your example aren't shareware-based; they operate with different economics. Shareware authors have full-time jobs away from the software they write. Most are excited if they generate a few thousand dollars from an idea they had."
We need them and they need us; it's a true symbiotic relationship. What do they want? Feedback. Recognition. Registration. What do we want? Software. Software. Software. Let's meet somewhere in the middle, shall we? It's not that far.
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Topic: Interesting Comments About Pricing... (Read 728 times)