With the numerous passive income streams that are sought after in today’s economy, there are several that stand out, particularly those that have low barriers of entry. Real estate is consistent and reliable but it requires capital. eCommerce is nice as well, but it requires some degree of prominence and upkeep. Then there is software. It can go anywhere from a solo operator all the way up to an extensive network of teams. Upon getting that software, however, you are ready to take it to the market. How do you go about pricing software products? And specifically, what is the best way to go about finding the optimal price for it? Look no further, here are several areas to look toward and prices that are best reached when looking to find that target range for whatever your software product might be.
There are several approaches as to how best to deal with your software. Because in reality yes you have software that is the product. But what you are creating here is an offer. Think in terms of ‘The Godfather’ or ‘100 M Finance Godfather’ Alex Hormozi and give them “an offer they can’t” or would “feel stupid to refuse.”
The Offer is itself your bargaining chip in making the sale. The product should serve as the thing they need, yes, however, let it function as a bargaining chip as well. Use it to prime what you are actually selling: the offer. In this weird inverted way, you have created a product that is actually just a vehicle for you to sell the offer, which will take you to their money.
And in mind, the offer will sell the product in the end. When pricing software products, you should start viewing your selling from that perspective.
Think About Your Software and Its Best Model
- Monthly or Yearly Subscription Plans
- Billing Extra for Storage or Additional Capabilities
- Bundling Recurring Subscriptions with Additional Capabilities
- Trial Periods and Reduced Pricing Opportunities
- Targeted Segments
- Result Based Pricing
When pricing software products, think about who is using your software. This will help determine how you want to price it. Once again this is but a single metric you can factor into the offer you make the prospective client. In one turn you could offer a highly-priced product. This can help segway the decision to purchase into being one that is value-based.
Alternatively, you have the ability to provide priced base selling, at which point you can put time into finding the specific metric and undercutting competition within it to receive that extra headroom with your customers. There are benefits and detractors to both. However, keep in mind that this also has an effect on the type of clients you will receive.
The Nuance Points of Pricing Software Products
- Service
- Demonstrated Value
- The Demand Curve
- Extras that Should Be Upsold
- Brand Image
- The Pricing Model’s Effect on Price
All these nuances will shape the nature of the product as it is in part what you are putting in, the demand it generates. The extra features may provide entirely new areas for the company, as well as the brand image and how the money is collected – think frequency and premium.
Opportunities to demonstrate value can also create a lasting effect that can allow for familiarity with the program. Too often people don’t want to pay right out of the gates for something they don’t know how to use. Let your work – if you believe in it do the work and then once they integrate it and like it they will be more likely to fork over those hard-earned dollars onto your plate.