Pricing software is a bit tricky for an independent software developer, especially one without much marketing experience. Here is how I see it:
Underpriced software isn’t good for the developer or the customer. The developer, having to increase the volume of sales to make a living, is left with a support burden that detracts from improving the existing software and developing new ideas. This also adversely affects paying customer who receive slower response times to support requests and fewer improvements to the software they have already purchased.
Overpriced software deters potential customers from purchasing a product that might otherwise improve their experience on a computer and perhaps even improve their lives.
Unfortunately it’s not possible to pick a single price that will satisfy all customers while providing a sustainable income to a developer, but it would seem that most developers will err on the side of overpriced when faced with this decision.
Communication between developer and customer
The price of software is a means by which the developer communicates to you, the potential customer, roughly how much time and effort went into designing, implementing, testing and eventually supporting the software. When you purchase a piece of software, even begrudgingly, you are communicating back to the developer that the price asked is fair given the amount of utility or pleasure you get from the software.
But if you don’t feel the price is fair based on your usage, you are left with few options. Commonly, the end result is you don’t purchase the software and the developer is completely unaware that they lost a sale. In this case, neither party benefits.
So how to address this breakdown in communication?
Developers should continue to price the software based on the amount of time, effort, and resources put into developing, maintaining, and supporting it, but the customer should also be in a position to tell the developer what they are willing (or able) to pay for the software.
Irradiated Software is running with this (perhaps misguided) idea, so stay tuned for the introduction of our next product
SizeUp where you can
“Name Your Price” (within reason).
This is the way I personally would like to pay for software. It's not an issue of quality: though I might not get $999 worth of Adobe Photoshop, others certainly do. It's also not an issue of price: even a $0.99 iPhone app can be disappointing. It comes down to feeling like you get more out of the software than you paid, while not underpaying for it either.
"Name Your Price" also addresses alternative payment schemes. "Pay by usage" and subscription-based applications are not typically in the customers' best interests. These pricing schemes, though designed to look appealing (e.g. low monthly cost), often incur a greater expense over time and overcharge for additional "add-ons" or hidden fees.
Conclusions
Perhaps this article is a gross oversimplification of the problem at hand, but the bottom line is, I don’t want anyone to be without one of my products simply due to a (perceived) prohibitive price.
I think we can meet each other half way with “Name Your Price”...