Underpricing:

If someone doesn’t need a program, the fact that you may have grossly underpriced it is not going to induce them to buy.

Overpricing:

Users don’t care if you “really need the money” or if you spent 10,000 hours on the program. They care about THEIR needs and the costs and alternatives for filling those needs. The two keys to pricing a program are the cost of alternatives and the value to the user.

The Cost of Alternatives:

To do a sensible job of setting a price for your product, you need to know the online and retail markets for your product. Find out what other programs are selling for and compare your program to them in terms of quality and features. For retail products, don’t look at list prices, look at web discount ads. That is your main competition.

If you had the world’s only program for keeping track of, say, telephone messages, you still could not charge hundreds of dollars for it because people still have non-computing alternatives–writing the messages down on paper.

Value To The User:

For a program to be a huge success, it must have a large target audience, it must have a value far in excess of its cost, and it must appear to be better and/or cheaper than alternatives. If the use of alternatives is already deeply ingrained in people’s habits, then the program must be greatly superior to alternatives (not just cheaper) to get people to switch and to learn a new system.

In effect, your target audience is made smaller when your program’s niche is already dominated by a highly successful program. Sometimes a programmer will price a program very low because he thinks that will get more people to pay for it. This strategy is fine if it is based on a comparison of the program to alternatives, but it usually is based solely upon desperation and/or lack of confidence. This strategy of trying to low-price a program is most often employed with low-value programs or programs with small target audiences. It does NOT work. Large numbers of people are simply not going to pay for low value programs, no matter what the price.

Likewise, pricing has virtually no effect on the size of your target audience. If you have a high value program, but a small target audience, you should keep your price up (still giving consideration to the cost of alternatives) and use the extra revenues to try to increase the size of your target audience (ie: get out and PUSH your program) or to develop other programs.

Charge for Value to the User, Not for Your Time:

If you are fairly new to programming and it took you weeks or months to perfect your program, keep in mind that an experienced programmer with a collection of sophisticated programming tools might duplicate your effort in a day. Don’t price your product based on the number of hours you spent (which we have seen some authors prattle on about in their documentation), but on the value of the program to the user.