Another good one from Daring Fireball: Pinprick.
And introducing the Gruber Theory of Software Pricing: "Don’t underprice your software in an attempt to appeal to cheapskates."
And after you are done reading that, I have three little relevant stories to share that I think back to often.
. . .
When I first started working on software to sell independently on the mac (back in the os9 days, written in realbasic and ... java of all things) I was talking with a friend of mine, Jamie Halmick, who with a partner had his own company writing plugins for Cinema 4D. He worked at home, and more importantly, didn't answer to The Man. Among the many bits of advice he gave me, the one he drove home most was not to sell your app too cheap. I of course ignored him, and he gave me crap when VoodooPad 1.0 came out for 10 bucks. "People read into the quality of the app based on price, and you'll even sell more" he said. "It's crazy, and it doesn't make sense, but it's the way it is."
When I eventually raised the price to 24.95 he asked me how things were going after the price increase. "Much better" I said.
"You should sell it for even more".
. . .
Another friend of mine (Hi Mike Marconi!) used to own a nice italian restaurant, and of course we would talk about pricing as well since he did a bit of consulting on the side. He told me a story about how his wine distributor came in and offered a couple of cases of decent, yet reasonably cheap wine for something like 4 bucks a bottle. Mike could buy that, and sell it on the tables for 8 bucks and folks could have a nice bottle of wine with their dinner.
Of course, none of them moved. Then he raised the price to 24 bucks a bottle, and bang- he sold out of them.
. . .
And the last story, and this is probably the most important piece of advice I have ever been given and is imprinted in my brain for all eternity.
In high school I worked at a local grocery store as a bagger, and eventually moved up to checking folks out when I was old enough to sell alcohol (18 in Missouri). Of all the positions, it always seemed like the guys working in the produce department were the most amusing and fun, so I would of course slack off around them when I was given the opportunity. Maybe it was because I would juggle the oranges for them.
Anyway, I remember talking to Tom, one of the produce guys, about a certain (and very cute) girl that was working there at the time and wether or not I should ask her out. My feelings were that she was too high on the ladder for me. He sort of paused and looked at me, and here's the part that's stuck in my mind forever:
We're under those crappy flickering florescent lights, and Tom is wearing a brown apron stained with random bits of fruit, restocking the celery and he's holding a stalk in his hand and pointing it at me and he says "Don't ever sell yourself short".
That's it. Those are the words that I've (tried) to live by ever since that moment. And if you haven't heard that bit of advice before, well... now you have. Don't forget it.
(The second most important piece of advice I was ever given was delivered to me as I was in my mom's car pulling out of the driveway and off to my first year of college. A friend of the family was outside of the car saying to me as we backed out: "Remember, try not to get distracted by all the work.")
Oh, And it turned out the girl had a boyfriend. Doh!
Leaking future plans? ;)
Plus, I bought the original VP right off. With the exchange rate (I was in england at the time) it was almost nothing - the price of a beer. And upgrades are always cheap too.
And I remember getting a painting into a show, and I had to pick a price. Everyone else was far too low, like 150 or 40, so I chose 669.
Mostly for comedy value, but also because I thought it would seem more valuable if it cost more.
It didn't sell.
For pricing, I think VP is right at 29.95. I'm not entirely sure if I would have priced VP Pro the same though; I'd be curious what ratio you're selling pro and non pro.
Also curious is whether you took difficulty of feature implementation into account in pricing - some features, like document encryption and perhaps item meta were probably not too hard to implement compared to what you probably had to do to implement triggers or perhaps the web server, but I'm just guessing from what I know of the APIs. I probably would have bought Pro at 39.95. 44.95 is an awkward-looking price point while 34.95 is too cheap - so I'd imagine you may have briefly agonized between 39.95 and 49.95.
I guess what I am getting at here is that the base version of your product should have a price appropriate for the software, as discussed above and by Gruber. However, once you start offering "Pro" versions, I suspect that there is more complexity involved. I pay 29.95 and get 9 advertised advertised features above what VP Lite does, $1.58 per additional core feature. But going to Pro, it's basically jumped to $5 per additional feature above regular VP, two of which could arguably have been implemented in a few hours.
When people are looking at the "Pro" version of your product versus the regular version, they are already a sale in the bank for at least the regular version. If you ask "do you want fries with that" (the 4 more features) and ask for $10 (1/3) more, the barrier to the decision is low - most people say "sure, fries sound good" or "sure, I'll take the larger popcorn" -- but when the difference is $20 (2/3) more, at least to me, it seemed unreasonable. So I got regular. So in my case I guess you lost ten bucks. So I guess it's one of those things to lie awake and wonder about which price for Pro will put more money in the bank.
Either way, great product :)
Wow, you analyzed that way more than I ever did :)
There are two main reasons why Pro is so much more expensive-
#1: the license for the sqlite encryption extensions. It cost 2k for that, so charging extra seemed like a reasonable way to get that back.
#2: It's worth it to the people who want the triggers, meta, and encryption. So why not charge accordingly?
For new sales, regular VP sells about 2.5 to 1 vs VP Pro.
For upgrades, regular VP sells about 1.5 to 1 vs VP Pro. The ratio change is probably because the difference in price is only 10 dollars for an upgrade vs 20 dollars for a new sale.
Imagine how tough it would be if you were Microsoft pricing out a whole variety of Windows versions!
And yes, certainly charge what the market will bear. I think you're doing fine there. For me, I didn't really want the triggers, but was interested in the webserver. So facing that, $20 was too much. If there were maybe more export templates or some other little cutesy thing, I might have sprung. But I guess I should try out Pro and see if I can put triggers and item meta to good use - I'm sure that if it clicked to me how that would empower my workflow I'd certainly pay more.
My experience is that people that really use a piece of software and care about it are willing to pay a reasonable price for the value they get. They're paying for you to stick around and keep giving them something they need.
People that moan about paying for a piece of software don't really use the software anyway usually. They're often collectors. If they're really using it, then they see the value.
After all we're often talking about an amount of money less than a cheap night out.
(Also, I *just* bought TextMate, and I'd rather not spend $50 on a productivity app again for a bit.) ;)
Upgrades from VP2 or VP3 to Pro are 20 bucks. If you went from VP2 to VP3, but now want to go to Pro, I can give you a coupon for 10 bucks off so that you won't be losing any money.
I grew up on a small farm. We use to post around town signs that read "Free Horse Manure", but we had few if any takers. After a year or two we changed the signs "Horse Manure $25 per truck load", and sold out.
Don't sell the meta features of VPPro short. For me, they are amazing. I couldn't do much of the really cool stuff with 'em, like making a concatenated homepage and an Atom feed. :-)
a software's value is a subjective thing, so I agree that you should price it wherever you think it's value is. On the other side of the coin, my opinion is that your pro version is too expensive. $39, maybe... To me, the sweet spot would be $19 for standard and $29 for pro. I agree that nobody should undervalue themselves, but take this to heart as well: If you price too high, people won't pay at all.
Case in point : I tried to steal your software. I looked at the price, said, awwww, $49 is too much. I visited a few sites, found some serials, found some cracks, applied some cracks to slightly older versions, seemed fine. Then I decided I wanted 3x pro. I would have stolen it if I could have found an acceptable serial or patch within 20 minutes. While searching, I stumbled on your blog and started reading. I'm glad I didn't steal it, because you seem like a nice guy. But honesty, I wouldn't have even tried to steal it at all if the pro price was around $30 instead of $50.... I wonder at what price people decide it's worth it to screw the developer.
all things being subjective, the people you guys call "cheapskates" don't think they're cheapskates - they think the developer is at fault for pricing their software too high.
If you had priced your software at $79, I don't care how nice of a guy you are, I would have ripped you off for sure or bought a different piece of software at the price *I* thought was fair. I'm sure that sounds unreasonable, and I don't really blame you for thinking so, but I thought honesty from the potential thief might be helpful.
I would argue that people are more willing to pay large amounts of money for software that they perceive as necessities for generating income... ie, adobe cs2&3, quickbooks, office products, etc, etc.... people may feel that organizational software is a convenience, not a necessity, and regardless of how brilliant it is, will not be willing to pay that amount - but they will make an effort to rip it off.
Anyway, I liked your software enough to purchase it and to write a message in your blog, and that fact alone might negate my argument, but i thought I'd mention it anyway.
here's to your continued success....