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WEB/DIGITAL How do you price your software?

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FAZAN

PARKED
Nov 1, 2019
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1
Hi, first time poster from Croatia here :)
I'm a programmer who wants to become an entrepreneur and here is where I'm at right now.
Last year, my college friend and I took part in a competition in creating apps for businesses.
Our job was to help a small manufacturer of remote-controlled ships that needed a software to help him manage his supply of materials,
production and sales.

We basically created ERP software solution, won a prize and we're now trying to find other customers, mainly small businesses that need ERP app.

We decided to go with an on-premise solution instead of SaaS because the market is saturated with them and it is our belief that
Croatian market will be more opened for this option.
Our main problem right now is that we can't decide what price to put on our app.
We figure it would include following:

- indefinite licence to use
- time period for support
- possibility for future upgrades
- possibility for future customized upgrades (probably prices separately)

Do you have any idea how to approach pricing something like on-premise licence based software?
Are there any materials to study on the topic? Online articles are mainly oriented towards SaaS.

I can give you a link for the landing page and demo app but it's in Croatian so I don't know if it will be useful.

Any advice is much appreciated! :)
 

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JohnForte

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Dec 12, 2019
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I would do it on a metric like for 10 products it would be $10 so they get a taste and then like 100 products should be like $1,000 and scale up from that. Remember if they are paying $10 they will be less likely to bother you, rather than a company that brought the $1000 license, they will want custom things and want support.

Find a metric that you could see a small company using than getting larger so they will have to buy the next license tier from you.

BTW congrats on the software!
 

NMdad

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Price depends on what the specific market niche will bear, and the value your software provides. Some apps charge per user while others charge per organization.

App prices targeting B2C are typically lower than for B2B. I used to work for an on-premise ERP vendor in a B2B niche, where the vendor charges $1,000 - $2,000 per month for the ERP support contract, and the implementation fee would be $30k-100k.

On the other end of the spectrum are B2C phone apps that are free or cost $1-5.

I'd look at who your closest competitors are, what they charge, and how they price their products/services (per user, per organization, monthly vs. yearly, any implementation fee, etc.).
 

Jon L

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whats the size of the problem you're solving? If companies you're targeting can get by with Quickbooks and Excel, and you're just making things a little easier for them, then you can't charge much. If their current way of doing business is costing them $500k/year, then if you charge $100k/year, they will see this as a bargain.
 
OP
OP
F

FAZAN

PARKED
Nov 1, 2019
4
0
1
Hi, first time poster from Croatia here :)
I'm a programmer who wants to become an entrepreneur and here is where I'm at right now.
Last year, my college friend and I took part in a competition in creating apps for businesses.
Our job was to help a small manufacturer of remote-controlled ships that needed a software to help him manage his supply of materials,
production and sales.

We basically created ERP software solution, won a prize and we're now trying to find other customers, mainly small businesses that need ERP app.

We decided to go with an on-premise solution instead of SaaS because the market is saturated with them and it is our belief that
Croatian market will be more opened for this option.
Our main problem right now is that we can't decide what price to put on our app.
We figure it would include following:

- indefinite licence to use
- time period for support
- possibility for future upgrades
- possibility for future customized upgrades (probably prices separately)

Do you have any idea how to approach pricing something like on-premise licence based software?
Are there any materials to study on the topic? Online articles are mainly oriented towards SaaS.

I can give you a link for the landing page and demo app but it's in Croatian so I don't know if it will be useful.

Any advice is much appreciated! :)
Thanks!
Well I think you're right about that. I could find a metric like that, maybe number of products as you say, or number of users that could access app (less users implies smaller company). Do you think that it is okay to charge more even though increase in allowed users/products/etc does not increase my expenses in regards to app itself? But probably would increase in terms of customer support..
 
Last edited:
OP
OP
F

FAZAN

PARKED
Nov 1, 2019
4
0
1
How much does your closest competition charge?
When I researched competition I found out some have more features than we do and they vary their price depending on number of users and "modules" (production, accounting, etc). I've seen their "price calculation" form that calculates the price of your licence after you select number of users and number of features. All licences include 1 year support and possibility of upgrades.
My question is basically where do I start when I want to define variables (No. of users, products, features..) and their values and impact on whole "formula" for price. Should it be:
- I want to earn N amount of money in the next M years? So I kind of play with the numbers, factors..
- I wont work for less than X amount (which then defines minimal price I guess)
- Something else?
 
Last edited:

Jon L

Platinum Contributor
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When I researched competition I found out some have more features than we do and they vary their price depending on number of users and "modules" (production, accounting, etc). I've seen their "price calculation" form that calculates the price of your licence after you select number of users and number of features. All licences include 1 year support and possibility of upgrades.
My question is basically where do I start when I want to define variables (No. of users, products, features..) and their values and impact on whole "formula" for price. Should it be:
- I want to earn N amount of money in the next M years? So I kind of play with the numbers, factors..
- I wont work for less than X amount (which then defines minimal price I guess)
- Something else?
talk to customers or potential customers. See what they say. The advantage of B2B customers like this is that they think like business people. you're looking to align your pricing with what provides added value to the client

Also, is there an alternative way of collecting money from your clients. For example, i have a similar app, and I'm planning to offer credit card processing services through it. If I do so, I'll be able to collect somewhere around 1% of the money processed on credit cards through the system. This amounts to far more money than I could charge for just the app itself.
 

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