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I’d Buy That For A Dollar!

So, you’re in the process of creating the next killer-app, you have the feature list all worked out, you’ve thought of a witty, search engine friendly name, got your hosting sorted, you’re going to make a killing! Or are you? Before you get too far along in your dev it will pay to make sure your financial model is up to scratch. First question: How much are you going to charge for this little beauty?

Is the price is right?

I'm guessing the software should be priced at 700 bob!

If you have haven’t thought about all the factors that are important when you are setting your the price of your software I’d like to point you in the direction of a free little eBook I have just read. It’s called “Don’t Just Roll The Dice A usefully short guide to software pricing“, the author is by Neil Davidson. I am pleased to report that I found it a really nice little book that I can highly recommend to anyone who is looking to lay a good foundation on which to build their product pricing knowledge.

The book is a concise look at the factors and thinking that should go into determining the right price for your product. It is written in a clear and friendly language making it an easy and enjoyable read and can be read in one to two hours. The book covers the basic economics of pricing, psychology of customers (including perceived value and fairness), pricing models and ways to segment your customers.

The book packs in a lot of common sense advice and real world examples and once read you will have some useful tools that will help determine the right price for your product.

The information in the book is suitable to those new to the subject, if you’ve done your own research on the subject, or you have a bit of experience with product/service pricing already then there is a good chance that much of this book will be already in your head, but for such a short read I think it worthwhile to read for those with confidence in their expertise in the area (even just to confirm their own thoughts on the subject).

At the end of the book there is a useful check-list that gives a high level coverage to the questions you should be asking yourself when pricing your product and after that a extensive references section that will provide a nice list of books and online articles that will serve you well if you want to take your learning to the next level.

It’s not all roses

What’s a review without negatives? There were a few to find, but nothing too significant. Occasionally I was left wanting. The book doesn’t always explore topics as much as I would have liked. For example the book includes discussion of the benefits of piracy, but fails to mention what it my opinion is the biggest plus of piracy: If someone is not going to pay for your product, it is better for you if they pirate it rather than them buying your competitors. Your not going to get their money anyway, but by having them pirate your product keeps them from getting entrenched with the other software on offer. If you are especially evilly minded there is also the benefit that piracy of your product stops the customer from giving money to your competitors, starving them of funds to compete against you.

Also, I noticed that the author did not provide a balanced view in the discussion of subscription style charging (what ZiZee will be using for Zimmersion) the author mentions that there are positives and negatives to this style of charging – but it seems to me that, apart from identifying a single “obvious” negative, he was more interested in discussing the “surprising benefits” than he had identified than delving into the negatives. As this book is aimed at people new to the subject I think it important to provide a balanced view of things lest people the subscription model is all roses.

But this “lack” of depth of information is understandable, it will happen with any book, especially one that is aiming to be a short guide. Far worse would be incorrect information, or unsupported opinions, which is not a criticism I can level at this book. All the advice and information in this book lined up with my knowledge / experience / learnings and the contents are well supported with an extensive references section.

Other small negatives worth mentioning are that there isn’t an index in the pdf (I guess not so important in a short ebook like this where you can search), and the contents page isn’t hyperlinked (with some page numbers being incorrect this was a little annoying).

The author has encouraged feedback, which I will be forwarding on. It will be interesting to see what happens there.

Priced to Clear

The book is released under a creative commons license so it is free (as in beer and to distribute) to download. In theory I could host the file here, but in the interest of ensuring you’re getting the latest version of the book I’ll point you to books web page. Even though the pdf can be had for free the author does make a request that if you feel you got value from it that you buy a hardcopy or let people know about it.

Just Cut To the Chase

At the end of the day the negatives I have mentioned are insignificant compared to how much valuable information is included in this book, especially since the pdf is available for free. The book crams a lot of information into a small number of pages, so it is well worth the hour or two it takes to read it. If you if you are new to this subject, or just want a quick refresher to get the juices flowing this book is a great starting point and is highly recommended. Download and read it now!

What are you doing still here? You’re meant to be off downloading the book and reading it. This post is over anyway.

Till next time,

-Jimmy McGrath

Have you read the book? What did you think? Comment below…

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