A lot of people equate value with price. The higher the price, the higher the value must be, right? I’ve seen this repeatedly in the B2B world selling software to mid-to-large enterprises. It’s certainly not always the case, but it’s more common than you might realize. And it speaks to the possibility that you can increase your price instead of decrease it.
The drive in software sales is clearly to lower prices. Jeff Atwood asks, “Software Pricing: Are We Doing It Wrong?” His argument is that lower prices increase sales volume. He has a couple of good examples of this. And he admits this doesn’t work all the time, although it may certainly apply in high-volume sales to consumers. But ultimately this does lead to price wars that hurt everyone. When prices get too low, vendors lose interest in creating value, and customers get less valuable software.
I do agree with Jeff’s argument that experimenting with price makes sense. You can do so quite easily through targeted sales. Pick a target market, create a sale, build a landing page and drive traffic to it. Measure conversion and sales. Rinse and repeat.
I’ve written in the past on how to price your software product and it’s clear that there are many variables and very few absolutes when it comes to pricing. But one of the variables that’s rarely discussed of late is “value” or at least, “perceived value”, and whether or not people really do equate value with cost. And subsequently, how important is that to your business in terms of marketability, sales cycles, revenues, customer acquisition, etc.
What do you think?