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Comment by ChuckMcM | Hacker News Reader

People for whom $1,000 for a tool is a reasonable amount of money, sometimes even a bargain.

People designing things will buy a CAD package which can cost anywhere from $1,000 up to $50,000. Complex solvers like antenna simulation or computational fluid dynamics can command big prices. FPGA design software. Simulators.

The are lots of things $1,000 should get you when you pay that for software. It should get you a phone number that someone will answer during working hours. A support ticking system where a bug report will always be resolved to either a fix or a workaround.

Think of it this way, if you buy a piece of software that costs $1,000 and using it you can do work for a company that generates $100,000 in revenue? Then that is a not a bad investment.

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The question is not why there are any software products priced at more than $1000; it's why the centre of the pricing distribution for many types of software is exactly $1000. Why does a CAD program cost $1000 instead of $800, or $2000, or even $10000? (CAD workstations certainly can cost $10000, so I don't think that's a stupid question.)

If this is "freelancer-tier" pricing, and freelancers don't have to worry about a price-point beyond which they must fill out requisition forms, then software priced for them should just cost however much they're willing to pay (i.e. some percentage of how much money it makes them), which should vary with their revenue, rather than always ending up at a similar global price-point.

And if it's not "freelancer-tier" pricing; if it's something else—then what is it?

> it's why the centre of the pricing distribution for many types of software is exactly $1000

The original question says "~$1000" in the title, and "about $1000" in the explanatory text.

$1000 is the purchasing limit in most large enterprises - anything over $1000 needs specific authorization. Buying a product at $999 is completely frictionless, while buying a product for $1001 involves multiple meetings and reams of paperwork. In enterprise purchasing logic, $999 is indistinguishable from free and $1001 might as well be $50,000.

Clever software marketers have realized that a $999/mo SaaS product fits under that limit just as well as a $999 boxed product.

This. For more information, see this post https://training.kalzumeus.com/newsletters/archive/enterpris... by patio11.

That was an interesting read. Don't know how much of it to believe though.

At least from having sold to a small subset of them, the “most” in “$1000 is the purchasing limit in most large enterprises” isn’t accurate.

Yes, almost every large company has different purchase requisition approval processes based on the amount and often the type of expense, but they vary widely between companies and roles. There’s nothing magical about $1000 vs $500, $250, $0, or $2500. I’m not even sure $1000 is the mode; at least from my small sample, $0 and something larger ($2500 or $5000) are more common.

Also, in nearly all cases I’ve seen, large companies determine the approval process for anything with a monthly fee differently (generally using the total 1-year expense). If it ever existed, the “clever exception” is long gone now that companies buy a lot of SaaS.

Finally, usually larger enterprises are using SAP, Oacle ERP, Coupa, or a similar “Procure to pay” (yes, that’s what the category calls itself) product, and they have really complex approval rules by ledger category, not just amount.

(My own theory is that patio11’s otherwise-good blog post simplified things so far that many readers thought the specific thresholds it gave were a lot more common than they ever were.)

What does "Procure to pay" mean?

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