>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.
Going a step further, you may want to consider that different classes of users are willing to pay different amounts for your program (students vs home users vs businesses, etc). This is where having various flavors of your product (lite, pro, academic, whatever) can be an advantage. You can price according to each market (possibly adding/removing features as well for each version) to optimize your revenue. -- --- Chris Smolinski Black Cat Systems http://www.blackcatsystems.com
