Pricing software isn’t a pure science. Far from it. But Neil Davidson does an awesome job of demystifying product and software pricing in his book, Don’t Just Roll the Dice – A usefully short guide to software pricing. The book is very short, and he’s made it available for free as a downloadable e-book. Just click the title above to download it.
You can also buy the book, which is exactly what I did. I just prefer to read things in print. It took me about 1.5 hours to read, but I know I’m going to reference the book regularly.
The biggest takeaway (and critical reminder) for me is this: Software pricing isn’t about pricing. It’s about your entire business.
The pricing you choose has to be looked at, and derived, holistically from everything within your business. For a startup, you have to ask yourself, “What do we want to be when we grow up?” That’s going to ultimately dictate pricing.
Pricing is so much more than a number (or a few numbers):
- Your price defines and impacts your brand.
- Your price can trigger competitive awareness (and price wars!) that you don’t want.
- Your price defines and clarifies to customers what you’re selling. Not specifically about the product features, but what you’re really selling beyond a collection of features packaged in software product.
- Your price has to align with your sales and marketing strategy, or you’ll fail miserably.
- Your price defines who you sell to. It tells the market who you’re targeting (and then you better understand why!)
Neil doesn’t provide a “Holy Grail” answer to software pricing problems. That’s because there is no Holy Grail. There’s no “one size fits all” answer to pricing. It simply does not exist. But there are definitely things that you need to understand, expectations you need to meet, and guidelines to follow. And you can get through most of the mystery of software pricing.
Don’t Just Roll The Dice will provide you with a very quick crash course on software pricing and a reference for when you’re working on this very challenging and critical issue.