Ben Langhinrichs

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Genii Weblog

Pricing apps: who decides depends on how much

Wed 15 Sep 2010, 12:03 PM



by Ben Langhinrichs
In the various discussions of AppStores and cheap utilities, I find it interesting to think about who buys rather than what they buy.  In my business, the software that is bought by administrators sells for six times the software that is bought by developers, and yet sells more easily.  Obviously, they solve different problems, but I am curious how the equations work out for small apps, utilities and templates.

Putting aside what the app, utility or template does exactly, who could/would make the decision to buy it in your company?

Priced between $5 and $10
Priced between $50 and $100
Priced between $500 and $1000
Priced between $5000 and $10000

It is likely that the answers differ.  In the company I used to work for years ago, the answers probably would have been:

Priced between $5 and $10        Me! (I might have expensed it or not)
Priced between $50 and $100      My manager (probably using company credit card)
Priced between $500 and $1000    My manager's boss (probably using company credit card)
Priced between $5000 and $10000  Vice president (my manager would have submitted request)

Note that it doesn't matter what the software does, on the whole.  The implications of that are twofold.  The first is, super cheap apps can be marketed to developers or users directly, while even low priced apps may need to provide justification to a manager.  The second might be the time required.  Hypothetically speaking, let's look at the same price points and figure out the delay between seeing and purchasing:

Priced between $5 and $10        Now! (If it seems worth it, I would buy it.  What's the risk?)
Priced between $50 and $100      Couple of days (to track down manager, explain app)
Priced between $500 and $1000    Week or more (even harder to nail down)
Priced between $5000 and $10000  Week or more to six months (usually the latter)

Again, without even determining what the software does, and without going into which will be approved and which will not, we can make some rough decisions about who is the target audience, who is the decision maker, what time frame is likely to be required.  It is worth looking at the business aspects of the apps, utilities and templates separately from the specific technical details.

What would the answers be in your company?  What others questions would price by itself determine?

Copyright © 2010 Genii Software Ltd.

What has been said:


930.1. Karsten Lehmann
(15.09.2010 17:29)

I would agree to your list, except for the last option "Priced between $5000 and $10000". A week is a bit short, I would say 3-4 weeks minimum.

Whether this all works for Notes/Domino software depends on how locked down your workstation is. If you need to ask the administrator for permission to install/use a $5 app, you probably will not buy it "Now!" as an end user. As a developer, admin and/or being your own boss, I would not think a lot about buying a $5 app.

But then you cannot expect the target audience to be 130 million seats, but a lot less.


930.2. Ben Langhinrichs
(09/15/2010 05:36 PM)

You are, of course, correct in pointing out other factors. The type of utility, the degree to which the desktop is locked down, the potential to do effect other users, etc. etc., all play into the decision. My point is mostly that developers often focus on the value, or perceived value, of the app and forget to consider the other issues which do not relate to the specific function. Those factors are important as well.


930.3. Bruce Elgort
(09/15/2010 05:37 PM)

Ben,

What is the size of the market size for said apps? I believe this an important dimension that needs to be included.


930.4. Ben Langhinrichs
(09/15/2010 05:40 PM)

Bruce, I'm not sure it matters in these terms. It is certainly an important thing for the developer to think about, but it doesn't provide much guidance for determining anything about the decision maker.


930.5. Bruce
(09/15/2010 06:19 PM)

Ben - Roger that.


930.6. Eric Mack
(09/15/2010 11:31 PM)

Excellent points and topic for a survey, Ben. Why not host this using a widget so folks can vote? I can host the survey if you like, too. I'm interested in the results...


930.7. Stephan Wissel
(09/16/2010 12:18 AM)

{{http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html|Joel has a few ideas on pricing too}}

So once your software crosses the $1000 mark, according to him you can very well ask for 75K. (Is that still true?)