Lawful Prey

September 22nd, 2006

I wrote somewhat extensively about software pricing, just before choosing a number for my then “nearing completion” product, FlexTime. The price I settled on was $18.95. I thought it would only be fair to report back with some data on the sales of FlexTime, after a month of availability at this price.

You’ll recall that $18.95 is a dollar less than what Brent Simmons suggested was the minimum price for software to be taken seriously. I did consider pricing above $20, but ultimately decided that, at least in its 1.0 incarnation, FlexTime’s feature set did not justify such a move. But I wanted to at least take baby steps in that direction, so I picked $18.95 for the beauty of the numbers, and for the thrill I got from pricing it a full $4 higher than my other products.

Sales have been encouraging, though certainly not a runaway success. In the 35 days since FlexTime went on sale, I have won 33 paying customers. And they seem happy. Subtract the commissions from Kagi and PayPal and I’m left with a cool $500 in revenue. Not enough to live on, nor enough to pay for the hundreds of hours that went into building and fine-tuning the app. But it’s a start. Beats donation-ware.

Especially interesting to me was observing the effect of the “red zone.” This term, also compliments of Brent Simmons, refers to the period of time surrounding the expiration of a trial period. For FlexTime, the trial period is 30 days. So while sales around its release on August 17 were fairly good, they dropped considerably after a couple weeks, to almost nothing. I waited and hoped that the red zone would pan out, and it did. At least to the tune of a few sales. Yesterday was “day 34,” and it was the single biggest sales day I’ve ever had: 5 freaking copies! I’m looking forward to a day when such a daily number seems disappointing, but for now I am getting a charge out of it. It can only go up from here.

But was the price wrong? Maybe at $9.95 I would have sold 200 copies, for around $1600 in revenue. Or at $35 maybe it would have sold 23 copies for $800. There’s no way to know, though it might be worth experimenting with a sale. One good thing about “erring upward” is it’s much easier to justify a temporary price reduction than a spike the other direction. I can’t announce, “This week only! FlexTime is available for the special price of $35!”

There is an adage that goes something like “if nobody’s complaining, then the price is too low.” I have been satisfied that complaints about FlexTime’s price are few and far between. Some people have suggested that the price would be more palatable at around $10. For them, I hope they eventually decide to cough up the extra $9 and come on board. The service and support is worth it. Really, I’m that good.

I was browsing the large collection of books at the Brewster Library Book Sale this summer. I ended up buying an old paperback, “How to Stay Alive in the Woods,” by Bradford Angier. The copyright is 1956, but to my surprise it’s still available from Amazon (last printing 1998). I read it mostly contemplating what my sorry vegetarian ass would do if forced to survive off of bear blood or rabbit’s droppings. But towards the end of the book, in discussing the equipment one might purchase before trekking into the wilderness, Angier cites a quotation from John Ruskin:

“There is scarcely anything in the world that some man cannot make a little worse, and sell a little more cheaply. The person who buys on price alone is this man’s lawful prey.”

Although this was written 100 years ago, it rings especially true for software. Keep that in mind before whining too loudly about the next $18.95 product you’re on the verge of buying.

8 Responses to “Lawful Prey”

  1. Kevin Walzer Says:

    Pricing is tough, no doubt. I am still trying to work this out in my own software products. My rule of thumb for now is to price according to a product’s place in the market, and to how much pain I think it solves for the user. My most expensive program has less competition and solves more problems than my lower-priced apps. (The high-priced app is right near FlexTime, at $18.75; the others are at $12.50). Since I’ve just introduced a 30-day demo model, I’m not yet at the “red zone.”

    I’m already self-employed, and pricing in my other business (book publishing) works a bit differently: I price the books I publish pretty much in line with the market (tilting slightly toward the high end, but not so high as to constitute a premium). It’s easier because there’s pretty much a standard profile for the kind of book I publish. With software, it’s harder. Especially when you consider how extraordinarily price-sensitive many people are about software (they will think nothing of spending $20 for beer and pizza, but not for a program).

    Still, I have to agree with you–real sales beat donationware. And if something is only worth selling for $5, maybe it’s not worth selling at all.

  2. Jason Swain Says:

    I started out pricing my app low as the first few versions had less features than I knew it would eventually have. I wanted to get a stable product out there and in use as soon as possible so that I could get feedback. This worked well, but sales were quite slow. When version 2.0 was ready I felt that the features justified a higher price, so I put the price up to $19.95. Sales went up a lot at that stage, I don’t think the price change had any negative effect.

    I also think that people realize that you get what you pay for, if an app is priced cheaply don’t expect too much in the way of features or support. You need to set the price so that people take the product seriously. I’ve had a few questions from customers asking if I will keep supporting my software. I think they have been burned in the past by shareware that has been pretty much abandoned. They realize that you need to make money to keep upgrading and supporting the software.

    I read an opinion somewhere (but I can’t find the reference now) that $24.95 was the minimum price that you could sell software for and expect to make a living from it, I think there is something in that comment.

  3. Cameron Bahan Says:

    I have been really curious about how others price their shareware apps. I am currently looking to finishing up my latest project, and thus once again started to discuss pricing. We were looking at $15 – its just a small game for kids, not a productivity suite. But is it too low? Maybe $25 would be better? Guess you can always come down in price … going up is harder.

    My first, and so far only, shareware piece was a tough call. I looked at it as a neat gadget … a small extra workflow enhancement … so I put it up at $5. I just rounded the year, and managed just over 130 sales – most in the few weeks after an update (and “red zone”). So, while it has been a little slower than I wanted — it was very exciting to see the first sales notices enter my inbox.

    One could argue that pricing higher would have caused people to look at it more seriously, still feel it was priced right based on functionality. Personally, I think I set my trial date too long … full 60 days. I was experimenting with integration into the users workflow as being the catch. However, looking back, I think that a shorter trail (if any) would have fitted the product better, specifically because it was priced as it was.

    I appreciate your openness about the experience, thanks.

  4. Conor Says:

    Welcome to the $18 dollar club, it has been a number that has treated us well, I hope it does the same for you. The importance of making clear what users are getting for a price is often overlooked. Will you support your product? How long are updates free for? What features are you working on? Being open about these things can have a bigger effect on your sales than price. (Your are quite a vocal person and proud owner of a blog so you have a head start.) I am sure the following statement has a big impact on SuperDuper sales: “back up and clone your drives for free — forever.”

  5. Dave Batton Says:

    Just for comparison, I priced Safe Place at $10 back in 2003, and got 24 sales the first month. Since then I’ve been averaging about 350 sales/year. That’s about $3,400/year after PayPal’s cut. I think I could increase these numbers if I got more updates out the door. Getting updates posted on MacUpdate and VersionTracker is an effective marketing tool.

    Even after three years, I still have no idea whether $10 is a good price for the product.

  6. Thul Dai Says:

    I find 19$ a bit stiff and will think long and thoroughly if I will spend that much, also considering the number of timers that are out there.

    I’m not trying to discredit your work, it’s just that this is one of many apps I run. If I were to spend almost 20$ on each of them, it would add up to a lot. That is why I like the opensource movement, where I contribute with time/work rather than money.

    I would prefer a lower price a lot. Maybe ‘sales week’ might be a good idea (could guarantee you a large and attentive mailing list community or blog readership). Or a lower student prize. Etc.

    Lastly, I find the trial period absolutely essential. But 30 days probably should suffice.

    Just my two cents. Feel free to ignore.

    Cheers, TD
    (not in the red zone yet)

  7. Daniel Jalkut Says:

    Thanks, everybody, for sharing your thoughts. I’m always interested to hear how both customers and other developers feel about the issue.

    Thul: I appreciate that $19 is a lot for some people and almost nothing for others. I will have to think about whether I want to do any kind of sales promotions in the hopes of reaching out to people for whom $19 is too much.

    However, I don’t think the argument “considering the number of timers that are out there” is really part of the equation. I’m not trying to compete with other timers, really. I’m trying to be the only timer that works the way my customers expect a timer to work. I’ve taken to heart the advice that competing on commodity products is a waste of time (and not a good way to make money).

    That said, there are features from other timers that FlexTime should absolutely adopt, but what it does well now is completely unique to it. For those unique featuers, it’s both the cheapest and most expensive option available :)

  8. Daniel Jalkut Says:

    And for the record, I also really appreciate and admire several awesome open source projects. I have participated by contributing at least small improvements to a few of them, and I try to make parts of my own code available as open source, whenver I can clean it up enough that I think it’s shareable :)

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