# How much should it cost?

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This question regards all kinds of applications, not just games. So, how much would you price your application and which are the criteria for your decision?

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That's great. No answer so far. Is this because you don't have a clue or is the question too general? Ok then, let's alter it a bit.

Which, in your opinion, are the factors that affect the price of a software product?

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Quote:
 Original post by BukleniosWhich, in your opinion, are the factors that affect the price of a software product?

The amount of time spent in designing, developing and testing it.

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i'd also say the avg. price of competing products.

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 Original post by Nik02The amount of time spent in designing, developing and testing it.

Given that I know how to design, develop and test, I guess.

I can think of a few other factors besides time spent:

-How useful the software is. (i.e. how many people will benefit from it).
-How many people worked on it.
-How much will be spent advertising it.
-How is it going to be maintained.
-How many people are expected to buy it.

But I can't say for sure that my application is worth that much money. All I can say is that, according to these factors, it should cost more than another application where less efford is put during it's lifecycle.

So if you can think of any more factors, please list them here.

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You should price it such that the product of (marginal profit)*(copies sold) is the greatest. To estimate (copies sold) you have to do pretty serious market research. If you don't know how to do market research, then you'd better learn first :-)

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 Original post by hplus0603You should price it such that the product of (marginal profit)*(copies sold) is the greatest. To estimate (copies sold) you have to do pretty serious market research. If you don't know how to do market research, then you'd better learn first :-)

That's more like it. Sounds like the proper way of pricing products.

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Quote:
 Original post by hplus0603You should price it such that the product of (marginal profit)*(copies sold) is the greatest. To estimate (copies sold) you have to do pretty serious market research. If you don't know how to do market research, then you'd better learn first :-)
Agreed. The best price is the one that gets you the most profit. Whether that's selling 1Million copies with $1 profit each or 1Thousand with a$1000 profit each is a hard thing to find out.

But the other side is to figure out how much you need to pay back the costs of developing and marketing etc.

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"Which, in your opinion, are the factors that
affect the price of a software product?"

There is no difference between software and any other consumer product. The major factors are market price elasticity, the ratio between total market size and production costs, and where you are on the innovation curve. A commodity product will tend not to stray afar from the pack regardless how big the market is. Similarly, small markets tend to sport high margin products than larger markets. Then incremental innovations tend to be sold as commodities rather than exclusivities, whereas radical innovations tend to sell with large premiums to cover the marketing expenses. Within a 'pack' your differentiation attributes will position you on the price line; a low-cost producer will have lower prices but will also have lower degree attributes such as stability, feature set or support level.

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From a proper business model it should vary on basically what the product offers. If we were to always base price on how much time it took to create it we would always have elevated prices. So its wise to look at the market and *fairly* evaluate what features your software offers that others don't. Then, compare the areas where your software falls below market expectations. Software that is specialized always costs in the thousands because its design with a smaller market base. (Software such as SAS (made by the SAS Institute) is a package that companies spend tens of thousands to license.) The company that makes it is rank the #1 company for software developers to work for and is valued in comparison to Microsoft. - There product has earned respect for what it delivers.. Quality Statistical regression queries.. Now consider, Microsoft sells Windows for about $100-$200 a pop but has NEVER delivered a 100% quality product. This is a clear comparison between stealing the money through elevated pricing and monopoly tactics and earning the money through a quality product. (And to date, I've never seen SAS crash or have an error.... weird..)

Just remember when you establish a price for your software ask yourself.. Does the software really earn/warrant every penny? - I tend to think if you feel like you are asking for %80 of what its really worth you are not "over-pricing."

And whatever dollar amount you choose.. always remember to add the 99 on the end. :P (ie $24.99,$59.99, etc..)

Tye

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