Don’t just roll the Dice (Tips on Software Pricing)
Posted on December 9th, 2009 by Paul McArdle – No Comments.
This e-book was referenced as a teaser for the “Business of Software 2009” conference.
We had been thinking about attending this year, enroute to Toronto (to pay our clients there an overdue visit). However, we did not go in the end (still not sufficient capability for delivery – one of the triggers of us starting Autopsy 2).
Hopefully next year!
1) Binary Review
|
The Book |
What we thought |
 “Don’t just roll the dice” by Neil Davidson |
 Wish I had been able to read this 10 years ago, when starting down this path… |
| Full Disclosure – oh, it’s an e-book, so this one is free, free, free! Worth far more than the price tag, though.
If you really do want to buy a hard-copy, get it here from Amazon (yes, this one is a tracked link through which we hope to add to the total amount Amazon pays us – at $2 and counting, we might be able to buy a book with the proceeds, one day!) |
2) Quick Review
One of the guys in the office pointed this out to me only a few short weeks ago.
I downloaded the book, and printed (yes, a few more trees) and then read with great interest.
If only the book had been available 10 years ago, when I was embarking on this venture. Seems to me (from reading the book) that the author and I were learning much the same things, at the same time, by making the same dumb mistakes!
3) More detailed notes
Some quick points (don’t have much time tonight):
(A) What is “the Software”
The author notes (p15):
You might think that your software product is just the bits and bytes that your customers download, but you’d be wrong. In reality, your product is much broader than that.
This is a point made very strongly by Geoffrey Moore about the pragmatist buyers, who buy “the whole product”.
For us and our “mature products” this means that the customers buy in to the fact that our products have become the standard way of viewing the electricity market, complete with online support and an active group of users.
(B) What the Value of the Software
The author notes (p19):
People base their perceived value on reference points.
When we released the first version of NEM-Watch back in 2000, we did not have anything to compare it to (and nor did our clients).
Hence we set a reference point by selling this version at $50. Whilst later versions do (unmistakably) deliver loads more value, we still have to operate with reference to this initial “line in the sand”.
(C) How to increase the perceived value
The author provides some very useful ways in which we can increase the perceived value of the software (p21-24):
We have followed some of these (with NEM-Watch and NEM-Review, for instance) in increasing the value delivered to clients.
(D) Be Boring
This was a key point the author made, in my view (p58):
When choosing your pricing model, here are two recommendations. Firstly, be boring. Secondly, licence your software as customers expect it to be licensed – fit in with their business model.
We have done this reasonably well.
There are some things that our current software licence/order system can’t do that we now want it to do (this is not a criticism of Tom, who did a stellar job back in 2003 as a uni student getting the current one up!).
We are undertaking a redesign at present to position the company for the next stage of growth.