In my last update I stated that the first paid version would almost certainly be released at $49, but I’ve now changed my mind! I’m a woman, it’s my prerogative to do so :-)

Pricing / Volume Considerations

With most products you can choose to price cheaply and aim to make your profit on high volumes or price high and sell fewer numbers but make more profit on each sale. I’ve already said that with my software I’d prefer to have a higher price point and fewer members. There’s actually several reasons for this:

Customer Support

As soon as you start charging money for any product you have yourself a customer and in the case of a product which has an on-going fee, you need to offer those customers support. This is a big issue in my case as I want to ensure that all members are fully supported in case of any issues. Therefore the more members I have the more time is potentially taken up by customer support which makes a strong case for having fewer members and a higher price point.

Technology

A higher number of members means more work for my server to do. I don’t actually think this one will be much of an issue unless it had to support a great many members in which case I’d be making so much money that I’d just pay somebody else to deal with it :-) However it still makes a case for fewer members.

The Exclusivity Factor

The idea of the tools that I am developing is that they will automate many of the tasks which have to be done manually – this gives the member a massive time advantage over people who don’t have access to such tools. Therefore the fewer people who have access to the software, the more of a benefit it is to those who do. It’s probably a relatively minor point as there are of course competing products out there but it’s still a consideration.

Competing Products

There are already products out there that do the kinds of things that I want to do. None of them are quite the same of course but I need to keep them in mind. There’s one new product in particular that has been released recently which is very similar to what my first paid version would look like and it’s introductory price is much less than I was planning to charge for my first version which is the main reason I am having a re-think!

It’s all very well deciding how much I want to charge but I need to stay competitive as well so if there is another product out there that does the same kind of thing for half the price then I doubt I’d get many customers!

My Pricing / Release Plan

I’m not just building a single tool but a suite of tools. However each one obviously will take time to develop so the idea is that I will release new tools incrementally and increase the price as I go along. As new tools are added to the suite, the whole product becomes more valuable hence justifying the price increase. Existing members will only ever pay the amount they signed up for as an incentive for early members.

Initially I had planned on 3 paid releases with the first version starting at $50 (well probably $49 or $47 for marketing purposes) but I have had a re-think and now decided to release 4 versions instead starting at $25 so the $50 version will have a lot more functionality than originally planned.

So that’s good news for the customer but I need to make sure that I am still being profitable. The problem with locking in the price is that if I get all my potential members on board at the earliest release with the lowest price point then I’m not going to get many members paying the higher prices later on down the line.

The way to solve this problem is to restrict the number of members that I take on board with each release. This is something I had decided on before as I want to use the initial members as testers too but I hadn’t really thought about the numbers. I shall have a think about it more carefully nearer the time.

This is all rather moot at the moment as I haven’t even released the free version yet and I’ll no doubt change my mind again but I like to post about my thoughts as I go along!

 


from Caroline Middlebrook