Hacker News Reader

Comment by patio11 | Hacker News Reader

The best advice I have ever received: charge more. Whatever your first impression is, it is not enough.

You do not have enough confidence in your application. You see how much of a hack it is. You worry that someone could duplicate it all in a Jolt-fueled frenzy. And you're wrong.

2.5 years ago I was terrified of the prospect of taking money and asked for some folks opinions on whether my software was worth $15, $20, or $25. In my heart of hearts, I was sure it would not sell even at $15. Someone convinced me to charge $25, at the least. I wish I remember who -- the decision has made me over ten thousand bucks.

And I'll be raising prices one of these days. People will pay them -- that is all I need to know to justify a price increase.

View on HN

I remember a great story from Sandra Kurtzig's book "CEO: Building a $400 Million Company from the Ground Up". She demoed her package to her first customer. He was wowed and asked , "How much?" She was worried about overpricing, but she said "$50,000" anyway. And when he didn't blink, she added, "per module." And when he still didn't object, "per year."

It really depends on who your customer is. Many managers have discretion up to $1000, so a few hundred dollars is not a hard sell. Above that gets into the corporate approval cycle. If you are selling enterprise software, you can get away with $2500 per seat, but then your selling cycle becomes months long.

If you are selling to consumers, maybe only a few dollars or a few $10's of dollars. Think TurboTax. Developers are the really cheap bastards, maybe $.05, But they can probably talk their managers into spending a couple of hundred dollars.

The perceptions of the customer makes a huge difference. A friend works at software company which sells software to corporate and government clients. Their pricing varies from $50,000 to $300,000 with the size and type of the organization they are selling to. They originally tried to sell to larger customers for the same price as smaller, but they didn't get any sales until they jacked up the price.

The price charged for our own product is now quadruple the "OMG! Nobody will pay this!" price I introduced the software at a few years ago. Every time the price has increased, sales and revenue have increased as well.

The best suggestion I've read (some time ago on the BOS forum) is to keep raising prices until you start receiving complaints about the cost. If nobody is complaining (not even the cheapskates), you're not charging enough.

Another bonus from higher prices: You no longer get those nickle-squeezers whose only criteria was finding the cheapest option. To generalize from my own experience, those folks are colossal pain to deal with.

If at least 50% of your prospects aren't complaining about the price, then you're not charging enough.

I didn't sell my first unit until I raised the price.

Reply on news.ycombinator.com