Pricing software by means

Among the many responses to my post on piracy was one which suggested I price my software by country. The general idea is that it’s unfair that someone in the United States is charged the same price as someone in, say, Russia, where economic conditions are much harsher.

I have to say that I agree with this sentiment. Russia isn’t such a warez capital because it’s a dishonest country – it’s a country with many skilled people thrown into chaotic times. In order for some of them to maintain these skills, they may need to stay up-to-date with the latest software. But in order to be ethical, they need to shell out a week’s pay to register one measly program.

I’ve actually talked with other shareware authors about this in the past, and a number of them shared my belief that charging a lower price in certain countries would be a better way to do business. Several of us discussed ways to handle this, but in the end it was decided that it would be so hard to manage that it wouldn’t be feasible. Verifying the country of origin and weeding out fraud would simply require too much time. There are ways to automate this, of course, but most of us need to rely on third-party ordering services so we don’t have much control over the purchasing process – so it would be up to us to handle the extra work.

Most shareware companies are one-person outfits such as my own, and we all find it difficult to balance the many demands of running our businesses. We tend to shy away from anything that’s time-consuming simply because we often have no time left at the end of the day. In my case, I’m not going to implement something if it means I have less time to spend with my kids.

One possible solution is to skip charging by country and instead ask each customer to pay what s/he believes the software is worth. A minimum price would be required to make sure the order processing fees are covered, but the final price would be determined by the customer. This sidesteps the need for any verification, and could potentially even increase earnings since I’d get orders from those who previously couldn’t afford our software.

On the surface I really like this idea, but the more you think about it the more it seems just as problematic. First there’s the fear factor: I rely on software sales to feed my family, so I’m scared to try such a thing. But even if I ignore this (not to mention the issues involving third-party ordering services), there are still a boatload of issues involving corporate sales, etc., that would eat away at my time.

I’d like to hear other thoughts on this so I’ve enabled comments for this post. However, I’m going to disable them once the comment spammers hit, so if you have your own blog you’d be better off posting there and sending a trackback ping.

BTW, I should add that my posting about this does NOT mean that I’m about to implement such a system, since the ordering services for both TopStyle and FeedDemon are already in place. I’m simply thinking out loud about how such a system might work in case I want to try it with future software.

43 thoughts on “Pricing software by means

  1. I’d like to give you money (feeddemon), but I just can’t afford full price (starving artist/college student). This pricing scheme would enable one sale, for sure. (I could probably afford $10 or $15)

  2. Greetings from Iowa!
    A freewill pricing scheme with a recommended purchase price would be the best way of doing it. Put the recommend at about 150-200% of what you would like to get for each copy. This way most people will see that, and either pay it or a percentage of it. Regardless, you get your targeted price. If they pay the percentage, you are happy because you got paid your price, they are happy because they got a “deal”.
    (BTW, this is how cars are priced.)
    The other way to do this is to put a “make me an offer” clause into your pricing. If it is lower than you will accept, trash it.

  3. Most countries don’t have only their own specific economics, but also their own specific language.
    So – just an idea:
    Make a language-specific version of your software. E.g. a version of FeedDemon with a fully Russian language interface, that can *not* be changed into another language. You offer that specific language version of FD for a lower, a Russian-specific price. The poor Russian people can buy it for this ‘Russian price’. There will not be many english speaking folks from richer countries who will buy that “Russian FD”, because they cannot read the interface.

  4. How much of the $30 is lost to the third party billing service? There are examples of software developed and used by many with donation programs to keep the developer(s) afloat. How much has Bram Cohen made from BitTorrent by simply taking people to a donation page after install? If you enact a minimum price you will see your customers pay the minimum price. If you offer extra goodies if your contribution is above and beyond a given threshold (think PBS pledge drive) you may see extra buyers.
    Six Apart was a two person company giving away their primary product, Movable Type, and offering to help you install their software on your server for a fee, grant you a key for $20 that adds ping ability for a recently updated post, and commercial users are asked to pay a license fee of $150. The installed user base generated from such a scheme allowed for the notoriety of TypePad, a premium service used by you and many others. The world has no shortage of weblog tools or RSS aggregators, but the multiple tiered product still does well.

  5. Oskar: a Russian-specific version of FeedDemon is an interesting idea, but it’s a little trickier to manage that it may sound. For example, every time a new version of FeedDemon is released, I’d have to create separate builds for each language, and then make sure that those with the Russian version always get the correct build. Really, any time separate builds are required you introduce another level of complexity, and this would certainly become unmanageable if additional languages are introduced.

  6. Oskar: Since the topic is cracking software, editing the executable with a resource editor and changing the string tables would change the language.. and, adding the fact that it increases Nick’s work, i don’t think it would compensate in any way

  7. What about offering payment plans or subscriptions. For example, a 6-month plan would allow 6-months usage for a reduced fee. You could maybe even setup a recurring charge to keep it going. Sure there’s some organizational costs, but it’s got to be better than varied pricing by country. If software has a trial period like FeedDemon does, you just include an option to extend that period.

  8. Jon: nice to see you’re still alive and kicking :) A “make me an offer” clause would add way too much support time for me to handle, but stating a recommended price as well as a minimum price is a good idea.

  9. Yes, subscriptions are another way to handle this, since people who use the software longer would pay more for it (of course, in some ways “upgrades” are just another form of subscription).
    I wonder, though, whether customers would really want to see subscriptions. I would actually find them annoying, since after I pay for a program I expect to be able to use it forever.

  10. 98% of the protections methods used on ALL software programs are useless (trial, crippleware, serial blacklists inside exe files, dongles like USB or parallel keys, internet activation through secure servers, unique serials ID generated through hardware check, anti-softice tricks and general anti-debuggers tricks, timelimits, timebombs, etc …). Dongles are hard and tedious to crack but give to crackers enough motivation and they will break your ‘marvellous’ dongle protection method (see latest Steinberg’s cracks based on dongle emulation, a several months work); also dongles are the WORST thing that a costumer wants to see (read some of the several ‘dongle-horror’ customer histories available on Internet).
    Anyway there’re a few methods, like StarForce (russian company, by the way), that are undefeteable; unfortunately these methods are almost always only available to mass production software (like CD replication plants). Shareware programmers that develop ‘small’ programs (like Nick Bradbury) cannot fight against piracy, yes, it’s a sad fact. They only can add additional value to its programs to hope that consumers will buy it and try to seek for the ‘best’ protection method.
    Unless someone develop some strong and REAL protection method, crackers will still cracking protections on a few days.

  11. Well, you may consider this scenario: you have price of $100 and there are
    100 users, one buys a legal copy, 99 use a pirated one.
    And you have can have price of $30, which results in 10 of 100 buing a copy.
    Do you get what I mean?
    Of course, I am not sure if this scenario can be applied to real life, but you have TopStyle and FeedDeame, so maybe you can let yourself to play with latter. I say that, cause I am still not sure, purchase FD, o go back to free SharpReader.

  12. Maybe a fully functional trial version with annoying Ads for those that can’t afford it? I have to think that anyone using the software for a few months will realize the value of it and want the ads removed. Then they might buy it. You may be able to make a little something from the ads in the meantime. Just throwing it out there.

  13. Interesting discussion. I just want to add that it’s not only a matter how poor or riche the country is, but is also a matter of the currency exchange. In Brazil for instance $30 dollars is about 1/3 of the current minimum monthly wage. There is a very big price discrepancy for anything that is imported. I like the idea of having a low entry price, and have people pay what they think the software is worth.
    BTW, congratulations for the really well done product.

  14. Смогут ли “свободные цены” решить проблемы пиратства?

    Пост Ника Брэдбари на его блоге о проблеме пиратства, о котором я писал здесь, вызвал очень большой отклик. Только что Ник опубликовал новую заметку, где продолжает размышлять о путях решения проблемы пиратства для производителей "шароварных"…

  15. Cade: Adware is something I’ve considered, too, and a few shareware developers have tried it with some success (and so, apparently, has Opera). But I believe there’s a bad feeling towards adware in general, not too far removed from the attitude towards spyware.

  16. Alex: Yes, I should’ve mentioned the currency exchange issues! Sometimes people outside the US end up paying more for software because of the exchange rate, and this is yet another issue that’s very hard for small developers to tackle.

  17. I sell a web developer product called TerraForm at two rates: full rate, and a special discounted rate if you promise to recommend the product to a friend. I’ve been surprised to find that almost half prefer to pay the full rate.

  18. I agree that charging different prices based on means is a good idea. Not only could this potentially increase legitimate use in foreign countries, but why not expand the idea to how it’s sold locally in the US? A fully functional, not-crippled-in-any-way “I make no money using your product, I just want to try it out and put it on my resume” version. And the *exact* same code could be sold to a business for higher dollars (repackaged and renamed with the appropriate marketing speak of course. :)
    Yes there are some “developer/free” editions of software, but that’s not always the case (and sometimes that software is crippled in such a way that it’s impossible to fully test or build your product on the Development version. Example: ColdFusion’s Dev Edition that supports only 1 external IP address hitting the server. How can I test race conditions with 1 user? I can’t. How can I test anything where I need multiple users at once on my application/site? Again, I can’t.
    The job market is very cut-throat now. People need not only degrees but also experience using software, sometimes a proven, shipped product. It’s possible to build things at home for a demo in these types of situations, but should a fresh out of college newbie have to pay 5 grand for a copy of Metrowerks if they’re only intent is to build a few test apps at home, pass them out to his roommate for QA and then update his resume? Probably not (even if he *had* the cash to buy it, which is unlikely).
    2 cents and some babbling,

  19. While minimum and suggested prices may sound like a good idea, when was the last time you spent more than was asked at the grocery store, bank or bookstore? (“Tips” at a restaurant is an exception). How many times do you think someone stopping at a highway toll booth pays for the drivers behind them? Occasionally, but but substantially. I’ve given my $30 for FD, but if the minimum price for FD were $15, that’s what I would have paid, even though I understand that Bradsoft’s exceptional support probably adds “value” to make it worth $30. Sorry. :-(
    On the other hand, I stick with Homesite and TopStyle, instead of Dreamweaver and TopStyle, strictly because of cost (a very small part of my profession relates to web design).
    Hope this helps, wayne

  20. Nick: Eudora offered an adware version for a while as well [and they may still do, but I’ve since moved on].
    Maybe you need an eBay like system where you sell N copies a day at the minimum price you can stand, and folks bid up the price to get a copy. That would create artificial scarcity.
    I don’t know whether to put a winking smiley after that or not…

  21. I think the idea of having a ‘name-your-price’ system would be more trouble than it’s worth – it’s more of Nick’s time wasted on deciding whose bids to accept and whose to decline, and then the negative feedback from those who were declined. But charging a lower base rate but encouraging people to pay more may work, as some people genuinely are generous and would pay the higher amount, and those how found the higher fee too expensive would still be encouraged.
    As it is, I have bought FeedDemon (and don’t regret it in the least – it’s a wonderful timesaver and a fine bit of programming), but would have preferred to have paid a little less than I did. On the other hand, had there been a system whereby the minimum required for a key was $15 but $30 was encouraged, I may have opted for $20 or something. You could give those who pay more some perks, such as a link on the FeedDemon site or something, like Movable Type do when you pay them (which incidently I did since I use MT every day and have had much enjoyment out of it).
    Although I’m mostly detached from it now, I spent 2-3 years with the team at Xteq Systems ( on their freeware X-Setup product. With the latest release (in beta), due to the drain on our free time and the poor returns from asking for donations and requiring commercial licenses, we went shareware, but only asked $8 for the product. Already, we’ve had some good feedback from those who frequent beta sites – while many were disappointed that future versions would not be free, they felt that the price was a good one and that they would pay for it.
    I hope you can find something useful in this.

  22. The idea of asking people to pay what they think the program is worth is a geat idea. TopStyle Pro is pretty good, but definitely overpriced by about $50. I’m still using version 2 light, but would upgrade if the price was more reasonable.

  23. What about a dutch auction? Or a uniform price auction? You could release a number of licenses every few months… See:
    There used to be some great discussions on slashdot on this topic but relating to the music industry, but I can’t seem to find them now. The most intriguing one I recall involved the author setting a total amount he/she wanted to earn from the work, and after that amount in sales the work would pass into the public domain. I don’t remember the specifics, though. Can anyone find this for me?

  24. Nick, i hope i have some valuable comments for you, since i am Russian and also a shareware author (web shareware, that is).
    I must say from the start, that i am living in Moscow, which can’t be compared to the rest of the Russia at all (Moscow is like a separate small country actually) in terms of quality of life, but in the last several years other Russian regions are growing very fast. Money from Moscow starting to flow to the regions and in several years, if the oil prices will not drop too low Russia might become one of the biggest markets on the planet. But right now, there are only several really wealthy cities in Russia, Moscow being the largest.
    Now to the topic.
    29.95$ that you charge for FeedDemon is NOT a big price for a potential Russian customer. Probably only a little too high, since it is an entertainment product, but still the price is quite reasonable.
    There are certainly a lot of people in Russia that don’t have enough money to pay even 29.95$ for your product, but then again there a lot of people that can afford this without a problem. There are other important issues here as well:
    1. People just have a wrong mentality here. A shift in mentality is required to even start thinking about purchasing software, instead of taking it for free or pay 3$ for a pirated cd with 700 megabytes full of pirated software (you can buy these cds anywhere in Moscow). So there are a lot of people who will not buy your product even if it will cost 1$.
    2. Another big problem is that only small amount of people and only in big cities have credit cards (actually, most of them are debit cards, but we call them credit cards anyway). So even if a person wants to buy your software, he or she might not have means to do it (again, even if it costs 1$).
    Russian shareware companies (most of them are initially working only with English speaking customers abroad) began about two years ago to offer special versions of their products specifically for the Russian market at a special price. The price is usually 1.5/2 times lower then the official English version price.
    The market of electronically distributed software products is very small in Russia at the moment, but it definitely exists and it is growing all the time.
    A general recipe for selling software in Russia would be:
    1. Add Russian interface to your product (FeedDemon already has it)
    2. Create a web site in Russian with product description.
    3. Use a Russian service to accept payments in local currency (such services can even accept cash payments in their office, but usually people pay buy a bank wire transfer).
    4. Provide support in Russian.
    Taking into account that the market is quite small and you would probably need to lower your price as well, i don’t think you need to consider going this way unless you have a Russian partner that will handle everything here.
    Generally, your price is ok and those Russians that can read English, have credit cards and will have an interest in your product will probably buy it anyway. This is what i am going to do when my trial will expire :)

  25. Sergey: Thanks for your thoughtful response – this information is very useful.
    You’re certainly right about a shift in mentality being required. It’s tough to compete at any price when someone offers your software on CD with hundreds of other pirated programs. I hadn’t realized that these CDs were so prevalent in Russia, which makes it much harder for me to consider a Russian partner.
    I should add, of course, that I didn’t mean to give the impression that I was only talking about Russia here. There are many countries where a lower price would be desirable.

  26. I’d not risk the voluntary price setting. Just as an example, if I happened to land on your software on a day my budget was tight, I’d likely have to pay the minimum. But with a fixed price, I either massage the budget or wait but I do come back and buy – at the full price.
    What you could do is experiment with lowering the price a bit and adding a contribution link to the description and ordering pages.
    Or, sell a non-upgradeable version (except for bug repairs) for lots less.
    Or cripple a version and sell it as basic the the full version as pro.
    Just throwing ideas around the nest but the voluntary payment one I’ve tossed completely. Bad plan.

  27. As far as I know, the software (Opera and Eudora specifically) are free when encumbered by ads. I don’t think free is one of the options Nick is thinking about.
    What about a categorical discount? Like academic, non-profit and the like. Maybe even a personal vs. business/corporate license?

  28. Another idea I’ve considered, sell a certain number of copies a week at a reduced price. If you really want the reduced price you better be in quick at the beginning of the week. Most people won’t want the hassle. This idea might cause people to delay their purchase though.
    Or have occasional (unannounced) special price days. If people want the special price they better check your order page regularly. Once again most people wouldn’t bother. Actually I like that idea. Might have to try it… ;-)

  29. The lights are on and nobody’s home.

    Nick Bradbury: Pricing software by means Nick toys with the idea of voluntary pricing for Shareware. There are several reasons why this won’t work. First, Nick assumes that all cultures have the same respect for intellectual property that is found…

  30. To those talking about how they would buy a copy at the minimum. There is two things here…
    1. The idea is to make up the lost revenue with greater sales, as it is easier to buy Nick’s software. I’m sure many people are like Oreb, but many people wait for paying, then forget.
    2. The idea is to price the suggested price _above_ the target price for the product. This way, the $20 is really the goal. Some people will pay $15, but there are others that not only see the benefit of the software enough that they will recognize that $30 is also a bargain. I agree that this relationship alone will drive the mean price of the software toward $15. However, the increased volume should make up for it.
    (BTW, Nick- Make a Mac version and I’ll buy it :))

  31. Nick, Greate software. I’m limiting myself to one shareware license a month and FD is next months purchase. This whole conversation is very enlightening as I’m working on software for sale myself, mostly targetted at business, though.
    The pricing scheme I’ve considered is a combination of a couple I’ve seen and appreciated. Version licensing, where early betas are free or cheap, and successive versions have more features and cost more, being sold at discount for previously registered users. Comparing ‘nag’ methods, I have most often been encouraged to buy by two models. That used by EditPlus, which is very effective phsycology. It tells you how many days past the trial period (doesn’t expire) and states: you should register if you use the software past the trial period. To continue, you have to click ‘I Agree’. Eventually, you find yourself agreeing. :-) The other is how w.bloggar works – also effective phsycology. On the website, it simply says: If you have found this application useful, please consider donating. This is mirroed in the app somwhere, in a non ‘nag’ way I think. If you’re honest with yourself, you find the answer ‘yes, it has been useful’ springing to mind and people of good conscious donate appropriately.
    Using these methods as a pattern, I’ve considered using the later for some of the smaller apps, and the former in most cases. Since software tends to evolve over time as OS and hardware trends emerge, we’ll have to adapt anyway. Customers who value the software, and a good deal, will be repeat customers as well as proponents.
    The final idea I’m kicking around for larger titles, mostly web based software, is to give the license away for free with service subscriptions, like hosting and support, and charging a business rate for those who want to do those things on their own at a hefty, but reasonable, markup. This ensures a revenue stream to cover the cost of support, and leaves the door open for continued income. Establishing the credit / debit pay connection at a small initial rate with loads of pricing options is sure to find a way to please everyone, I would think. If they want feature X, it’s $5 more a month (and here I’m talking about substantial value added features, not something basic like ‘spell checker’).
    At any rate, no pun intended, this has been a very educational post and comment thread to read. Thanks!
    Jerry Carter

  32. I think needs-based pricing is a bad idea. It gives me the impression that you are “sticking” it to us in the United States because you assume we can afford it. That is exactly what the drug companies do, and look how well that works :) You assume that everyone in the US is better off than everyone in Russia, which isn’t true.
    For true needs-based sales you would need to charge the high-paid executive more than the grocery clerk in every country. Obviously that is way more trouble than it is worth for $30.
    All these people who think $30 is too much are lying. How can you say $30 is too much, but $15 is right? Are you telling me that you couldn’t come up with another $15 to buy something you really wanted if you had to? I’m sure you have wasted an extra $15 on plenty of things.
    Nick should charge whatever he wants, same price to everyone. The only discount should be for multiple copies. It’s a free market system. If the price is too high, less people will buy and his sales will suffer. You can bet that if everyone thought $30 was too high, Nick would have lowered the price until the orders started coming in.

  33. Maybe a fully functional trial version with annoying Ads for those that can’t afford it? I have to think that anyone using the software for a few months will realize the value of it and want the ads removed. Then they might buy it. You may be able to make a little something from the ads in the meantime. Just throwing it out there.

  34. Смогут ли “свободные цены” решить проблему пиратства?

    Пост Ника Брэдбари на его блоге о проблеме пиратства, о котором я писал здесь, вызвал очень большой отклик. Только что Ник опубликовал новую заметку, где продолжает размышлять о путях решения проблемы пиратства для производителей "шароварных"…

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