Last week, a friend asked the following:
I'm curious as to whether you're building to some kind of crescendo? The writing is kind of like you have a plan for exactly where you want to go but you want to take your time getting there.
The honest to God truth is that I am exploring. There's a lot of thoughts and questions related to experiences over the past years. For all I know, I'm not always asking the right questions or thinking from the right foundation.
And as I look back at how I've approached pricing, I think that may be the case.
If you've followed this blog along for a little bit, a commonality is that I've started or participated in companies that are Independent Software Vendors (ISVs). And those companies focused primarily on making tools and add-on libraries for other software vendors. They each sold product to software developers, one license per developer.
There was another commonality: In each case it seemed like we treated the developer as a black box. We knew they'd spend their money but we didn't really know exactly what would trigger them to spend it. We had a good basis for ideas, because we're of the same ilk. We knew what we would pay for a product. We knew what deals we would feel were extortive or greedy. And what deals would feel beneficial.
With the first venture, selling a version control product, I set a price based upon what I felt about the product and comparing it to pricing for similarly-featured products in the same category.
If I remember correctly, TurboPower's pricing for its products was set in a similar fashion. We looked at what we felt the developer would be willing to pay and how it compared to the price of competing products.
And with ComponentScience, pretty much the same could be said.
What kind of feedback or response did we get from customers? What was the result of this approach?