Malcolm, > Looking for feedback on how to come up with a subscription based > pricing option for a traditionally priced piece of software.
Some rambling ... I regard database software products as necessarily subscription sales. As opposed to games and software products that can be "versioned", even language products like VFP. Database systems are unique in that they amount to their own worlds that are in a constant state of change. Not exactly living things, but close, and they need care and feeding, and if unattended will eventually die (I'm not talking about VFP the language, but business applications created with it. Mature is okay for languages, but ongoing businesses need growth and flexability). Additionally, it's possible that even a tiny code or data mistake (or attack!) can have great consequences. In this context, an ongoing connection between users and maintainers of the program really is a necessary, even if the customer doesn't realize it at the time of purchase. As it happens, I have 2 cases that are straining this belief today, customers who have purchased the product, with 1 year support, and since have declined to pay the annual maintenance. They're both into their 3rd year now, which is nice from one point of view, but it has to be just a matter of time before something bad happens and they need help with some problem or the other - at which time they will be told they need to get back on the maintenance plan, and that we can't help them unless they do. They may not be happy to hear this, but we're up front with how it works, and this example is cited as what we don't want to happen. I'm also very much against offering an hourly developer rate, and I actively discourage such activities, because developers should be focused on tasks useful to all customers, and side projects eat precious dev time. Pricing is an issue I've probably spent more time going over then any other. I recall Borland's success with breaking the price barrier with Turbo Pascal (which I bought on a whim at that price), but I've also seen Prodigy near-collapse over offering free support with a cheap monthly membership. I started only knowing the answer is somewhere between these extremes. What I wound up doing was getting a feel for the pricing of competive products and then studying scenarios using Excel to project sales and expenses with the set of variables defined at the top of the sheet so I could change each to see the effect on the worksheet/chart below. I wanted a price that would be as low as possible, but still profitable. Reasoning: - there are small businesses (our target customer) out there who are really struggling and just can't afford the benefits of a useful database program. We know that what we bring so much to their table that we just can't let a relatively small think like initial selling price get in the way. - once they are on board, and treated right and all other things being roughly equal, customers tend to stay, and that's nice annual income. A complicating factor is that people like options/choices, so I've been working on a build menu, like Tiger Direct uses, to let customers build their own product, selecting from a list of optional components and sending their order to a build machine, which receives and fulfills the order, all automatically. Trouble here is that this is yet another dev task, and I just can't keep investing without building up sales first, so for now I've on giving 2 choices, between a "Basic" and "Professional" versions, one with a selected subset of features and (read only) bulletin-board support, and the other with all of the features and live support, i.e. the 2 ends of the spectrum, but primarily focused on whether live support is involved or not. Bill > Even though our product is not a hosted service (yet), we have > several pilot customers asking us about an option to pay for our > software on a subscription vs. up-front basis. > > For purposes of this discussion, given a software product priced > at $1495/seat plus 20% year support and maintenance (after the > first year), what would you consider a fair monthly fee for a > pay-as-you-go (no contract) monthly subscription and what is the > justification behind your pricing model? > > My initial thoughts: > > A monthly subscription fee that's between 6.5% to 10% of the > retail price. Using the above example, a monthly subscription > price would be between $99.95 and $149.95 with a break even > period between 10-15 months. > > Anyone have any better ideas or reference to a scientific way to > approach this question? > > Thanks! > Malcolm > > > --- StripMime Report -- processed MIME parts --- > multipart/alternative > text/plain (text body -- kept) > text/html > --- > [excessive quoting removed by server] _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/7aec9e22fb1c44b38423eb0402cfd...@bills ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. 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