Kevin Elliott wrote: > You most definitely need to factor in how much it cost you to build > your product. Even if you didn't spend a dime to build and promote > your product, your time is worth something (or reduction of income due > to spending time on building your product). You need to factor this > into your pricing. If you spent $1 million to build a software app (oh > god, i hope not!) then you're going to have to jack up the price of > the product in order to get a return on your investment.
I disagree. I believe you should price your product at whatever price point (or points) you believe will give you the greatest income (income from sales - cost of sales), ignoring any sunk costs (such as development). The optimal price is going to be based on the user's perception of the value of your product, this is a function of the amount of competition, your marketing and lots of other factors. It is probably only loosely coupled to the amount of development effort (if at all) - most customers have no idea how difficult something is to develop. If your profit isn't a lot more than your sunk costs you are in trouble, but increasing your price above the optimal price point is only going to reduce your income due to reduced sales volumes. Also factoring in the cost of development assumes you know in advance how many units you will sell, and you can't know that. best regards Andy Brice http://www.perfecttableplan.com http://www.successfulsoftware.net
