On May 14, 2007, at 5:57 PM, Brendan Murphy wrote: > Russ Tyndall wrote: >> It sounds like you are saying: the price should be high *now* >> because there is no competition. >> >> And that later, we can expect lower prices because more plugin >> developers will show up and force market prices down. >> >> Interesting theory. > > Ding, ding, ding! Nothing what I described is new, but basic > economics. Why shouldn't 3rd party developers charge what their > products are worth? Look at our favorite company's products like > the iPod and the iPhone. It is easier to lower prices than to > raise prices. Apple wants to maximize its profits and will lower > its prices in response to competition if it needs to.
3rd party developers *should* set the price of their plugins to whatever maximizes their revenue. I haven't seen any evidence that they aren't. Comparing iPod and iPhone economics to RB plugins is apples and oranges. Demand for the iPod was huge, and supply was constricted. The iPhone's demand will likely be high, and supply constricted also. (I guess.) High demand and constricted supply naturally result in high prices. Unfortunately, these circumstances have never been true for the RB plugin economy. > >> By all means, they should charge a price that maximizes their >> profit. What makes you think they haven't? >> >> If they weren't moving enough units, wouldn't they lower the >> price? And if they were moving too many (more than they could >> support), wouldn't they raise the price? >> >> Ultimately, we don't get to put the price where we *wish* it >> should be. > > You are thinking backwards about this (BTW, I think it is safe to > say you can't move to many units). Vendors desire to maximize > profits and lowing prices in this market will not increase demand > since they at the low end already (they have nowhere to go but > up)! Lowering prices *will* cause you to move more units. Have you not lost sales due to your high price? Wasn't it you that reported customer complaints about your price? And those are just the customers that bothered to complain. Now, your problem is: if you cut your price in half, will you move 50% or more units? If you do: Victory! Figuring this "golden price point" is the hardest thing to do. How much can you lower your price and enjoy increased revenue? How much can you raise your price and keep your revenue totals intact? I *believe* that plugin prices are elastic; a 10% drop in prices will cause your sales to go up by more than 10%. However, a 90% decrease will likely work against you! : - ) It is possible to sell too many units. What if a developer finds themselves spending 90% of their time on support? And they cannot afford to hire a full-time support person. Their price was too low --- they should've set their price higher and reduced the number of customers that would require support. > It makes no sense to lower prices if you have no competition > to worry about, thus my suggestion to 3rd party developers to > raise their prices and make the 3rd party market more viable to > work in. Not to belabor the point, but raising plugin prices will not make the market more viable. Only more RB users will make it more viable/ profitable. You can raise your prices, but you will sell fewer units. Financially, you could be worse off. > In the case of the FTC I have set the price where it is > because I have no competition (including WordGuise which BTW is > more expensive than the FTC). Charging one tenth the price will > not give me a ten fold increase in customers and would be > disastrous for that revenue stream and thus puts future support at > risk. Charging the appropriate price means I can continue > supporting it properly. WordGuise is $100. FTC is $450. I apologize if I am missing something. (Source code inclusion?) If you are happy with the number of units you are moving at your price, then great! Don't change a thing! But if you're not satisfied, it's because your price is too high. > > Bottom line, developers like MBS and Einhugur are in the driver's > seat and can set the price they want since they are not competing > against any one. With these posts I am trying to reshape the > expectations of the RB community to be more realistic since they > have had such an "extremely" low cost ride so far and if they want > the RB environment to be the best it can be, it takes investment. > As they say, there ain't no free lunch. > Raising plugin prices for any reason other than due to the law of supply and demand would be harmful to the RB community. Higher plugin prices will not attract new RB users, and discourage existing RB users from using plugins. Developers will move fewer units, and probably not be any more profitable than they are now. In my opinion, the proper course for plugin developers to enjoy more profitability is to "evangelize" the RB development environment more vigorously. (Actually, this is true for *all* of us --- makers and consumers of plugins both.) Most of the time when I see a plugin developer mention RB, it's not what I would call "evangelizing". : - ( ----------------- Russ Tyndall Wake Forest, NC _______________________________________________ Unsubscribe or switch delivery mode: <http://www.realsoftware.com/support/listmanager/> Search the archives: <http://support.realsoftware.com/listarchives/lists.html>
