Don't Just Roll the Dice - a usefully short guide to software pricing

Neil Davidson · First published October 1st 2009

“At Business of Software 2007 Michael Pryor held an impromptu session on how to price your software. So many people turned up, and so many people kept on arriving, that by the time they’d introduced themselves there was no time left to talk about software pricing. I’ve had similar experiences; in fact, “How do I price my software?” is probably the most common question I’m asked by software entrepreneurs and product managers.

This handbook is an attempt to answer that question.” Neil Davidson, Author.

“Don’t Just Roll the Dice” is a guide to software pricing that provides a comprehensive understanding of how to determine the right pricing strategy for software products.

1. Understanding the market: Determine the value of your product to the market and research your competitors’ pricing strategies.
2. Calculating the cost of delivery: Identify all the costs involved in delivering your software product and use this information to determine your minimum acceptable price.
3. Segmenting your market: Create different pricing strategies for different segments of your market to maximize your revenue.
4. Defining value-based pricing: Determine the specific value that your software provides to each customer and adjust your pricing accordingly.
5. Building flexible pricing models: Offer different pricing options to meet the specific needs of different customers.
6. Developing pricing bundles: Create pricing bundles that offer multiple products and services at a discounted price.
7. Offering discounts and promotions: Offer limited-time discounts and promotions to generate interest and drive sales.
8. Continuously monitoring and adjusting pricing: Continuously monitor your pricing strategies and make changes as necessary based on market conditions and customer feedback.
9. Providing excellent customer support: Provide exceptional customer support to justify higher prices and increase customer loyalty.
10. Testing your pricing strategy: Continuously test and refine your pricing strategies to ensure that you are offering the best value to your customers.