Licensing Fees - what is appropriate?

[gnznroses]

hey,
just thought i would try and get some general opinions on the pricing of software. i often feel like i'm selling myself short, pricing my software too low, but am afraid that if i raise my prices that i'll scare people away, particularly when it comes to site licenses. sometimes i've really kicked myself for the license fees i've charged, so i've raised them many times, but i still think i'm going too low. there are only a couple of competitors in my category however and they price theirs incredibly cheaply.

my software is security related. my single-user license fee is $20.
some example license fees for businesses:
10 computers - $110 ($11 ea.)
30 computers - $210 ($7 ea.)
60 computers - $330 ($5.50 ea.)
120 computers - $500 ($4.16 ea.)
200 computers - $700 ($3.50 ea.)
400 computers - $1,000 ($2.50 ea.)

my question is, what would be considered reasonable? what's the norm? we don't do one-size-fits-all site licenses, and base it on the number of computers.

[dclamp]

well, to start off, list things that your program does, we cant give our opinion on something we know nothing about.

[gnznroses]

i didn't think it was relevant so i preferred not to give specifics ;) but it prevents the users from doing things that they shouldn't. i sell to both parents wanting to restrict their kid's access, and businesses of all kinds (basically anyone with computers, but notable ones include schools, hospitals, government offices, and banks).

the single-user price may be too cheap ($25 may be good, but i only recently went to $20, up from $15...), but i am most interested in the sliding scale of the site licenses. i don't know how deep of discounts are usually given on large orders. but i have a feeling that if a company has say, 500 computers, they can afford more than what i've charged in the past, and even more than what i charge now.

a competitor of mine sells an unlimited license, for i think $400, but i'm not really worried about competition anymore.

[randem]

Price of software not relevant to what is does... NOW THAT'S A NEW ONE!!!!

[dclamp]

well it actually is relevant. If you thing includes 2 feature then we will say lower the price, if it is a sophisticated and elaborate security application than raise the price.

This is what your asking me:
"How much should i sell this TV sitting next to me for?". the TV could be an 72in LCD, or it could be a 13in TV that you need to crank to work...

[Hack]

I agree with the others.....it is difficult to impossible to determine a license fee without knowing what the product being licensed does.

You indicated your competitors were pricing their products more cheaply than are you. Do your competitors have as sophisticated a system as yours? If yours is better, then it should cost more. If not, then it shouldn't.

[gnznroses]

Ours is better.

I know that features and quality are going to be the main factor in determining the price, but I'm fairly comfortable with the $20 price (though, like I say, $25 might be reasonable). the main reason i was asking is for opinions on the fees for "site licenses".

i know there's not a single answer to my question, i'm just hoping to get some opinions. my prices used to be cheaper still. i sold a license of 500 computers to one of the nation's top medical schools for under $650 (after a 15% educational discount). i think that was the sale where i decided i was really low-balling it and raised the prices somewhat. i think i could have sold it for two-three times that if i wanted. but like i said, i've always been afraid of pricing too high for less well-off businesses.

the most common license that we sell are probably in the 50-150 computer range (100 licenses is $450). our customers are happy with the product and we have many repeat customers who buy additional licenses.

[randem]

You still don't get it do you???

We have no clue of what you are talking about and you want us to give you advice...:eek: :confused:

[gnznroses]

mmkay.

you're overcomplicating it. it's simple. but if it's over your head...

[dclamp]

I think your over complicating it. There are very good developers trying to help you with your question and you are doubting us.

This thread is going to go no where if you don't give us some input. Name some things that your program does that the others don't. name some of the competitor software. something!

[gnznroses]

lol, ok.
i misread randem's post btw. i thought he had said "you have no clue of what you are talking", which kinda pissed me off. i see now that i was wrong...

my software prevents users from installing programs or using certain programs that the admin doens't want them to use. it can also block windows features like control panel applets, or options screens in IE or what-have-you. it was initially targeted at parents, but now business is my main customer. when a user tries to perform an action that they are not allowed to take, it asks for a password. on a network, the user can request access from a designated admin. it's not the most feature rich or polished software, but it works well enough.

i'd say the main competitor would be winguard pro (winguardpro.com). they don't have any networking features. they do have an option to disable boot keys, and they emphasize encryption more (my program can encrypt files as well, but it's not a selling point).
they used to charge $30 for a single license and i think $750 for unlimited. i think i've got them on the run because not it's $19 for single ($1 less than mine), $197 for "100 or more" (they have two order pages which contradict each other. one says unlimited is $200).
if i can reach a customer first, they're not really a factor. as long as my prices don't go too high, to send people looking for alternatives. i believe most of the time, they don't really bother to look elsewhere. i don't think i'm losing hardly any sales to these people. except for those that find them first. (i could be wrong, but if they were selling more than me [which isn't a lot...], they wouldn't have drastically lowered their prices)

like i've said, i'm comfortable with the $20 single-user fee. i could probably raise it to $25, but my main concern right now is the volume licensing. not just because i feel that i've shorted myself on many sales, but because i'm about to launch a targetted marketing campaign and this would be the best time to raise the prices on those bulk licenses.

my feeling is, if a company has a few hundred computers, and probably 2-3 times as many employees, the cost of a license for them (as listed now) is about the pay of one or two people for a single week. to secure all of their computers for what is likely to be a couple of years. so it is a bargain, but bargains are attractive and they sell. i'm just wondering if you guys think my prices are way too low, or just a little too low, or on target s is.

[randem]

You do realize that Windows comes with some of those features out the box with no extra licensing? A network admin could lock the computers down from the server. What are you offering above what windows offers, which you would like the client to pay for?

[szlamany]

You have to sell service to make a difference - anyway (but that is a different thread).

But back to the OP's topic.

You have to look at your purchase levels to know where to price.

$20 or $25 - well - are you selling 1000 units a year or 10000 units a year.

A client with 300 users - and selling it at $750 - again how many sales at this level in a year?

The idea is to support the business, make a profit and then plan for next 5 years goals (let's call this PLAN A and we'll relate to it later).

This question has nothing to do with software and everything to do with business - which can be answered by any business manager you happen to know (although they will all have a dozen different opinions themselves).

We used to sell our product at a large up-front cost and then 15% maintenance per year there after. We recently took the "total-five-year-cost" amount and divided by 60 months - customer now sees no big initial outlay of cost and we have good cash-flow for years to come.

And we base that monthly fee on a metric that the user is happy with.

$x dollars per month + $y per employee

btw - employee is not computer users - it's any and all employees. In our business the "size-of-the-customer" can be best determined by the number of workers.

You don't need to know the value of "x" or "y" we use - that is at the end of the formula...

...because it all comes back to PLAN A.

What do you need to make annually to survive? And to prosper??

[gnznroses]

i average around 25 unique customers per month. that includes individual sales and bulk sales. maybe two bulk sales per month.
not much. which is why i'm doing a marketing campaign soon (direct mail).

windows does come with similar features out of the box, but it's not as flexible as our software. are you suggesting there's not a market for the software, randem?... if so that's funny, because our software is on probably 12,000+ computers atm.
i feel that most of our potential market doesn't even know that they want our software yet ;) i worked at a call center and people abused the computers left and right. when i was in high school it was the same (i was probably the top abuser actually, lol). they don't know how to stop it, and don't want to put in an effort to find out. but installing some software would be an easy fix for them.

i don't think i want to get inot charging yearly fees, because i don't plan on updating the software very much anymore. i could charge for support, but i think a one-time fee is best.

i basically can price the software however. it's just me and i have another business as well, so i basically just want to price it at what most businesses are likely to be willing to pay, if not a bit less than that to make it a good bargain. but many times i have been told by customers that it's very cheap. i've even heard "wow that's cheap". so there's definitely room to price it higher. maybe even double what my current prices are.

maybe the right people to ask would be IT managers, not software developers ;) of course they don't make the money decisions... but they make recommendations for software and do take price into account when deciding what to recommend.

[randem]

No, I was not suggesting that there was no market for you app. I was merely attempting to ascertain just what your target market was. Different target markets will pay different prices. It seems that your software is not targeted to the IT professional but possibly the business owners or business managers who wouldn't even know how to install Windows, never mind taking advantage of it's features. The market is for a relatively quick fix with minimum effort/knowledge group.

IT professionals would pay quite a higher dollar amount that the other group. This is why I asked...

[gnznroses]

OK, thanks for the input.
I don't necessarily agree though ;) I think if anything the ones who are more computer illiterate would pay more, because they don't know how to do it any other way. Of course then again they might not realize the dangers as easily either.

[randem]

It Professional would pay more... When I worked on Wall Street there was a saying...

Nobody gets fired for buying IBM...

It was more expensive than the other guys but it was the acceptable path

At NASA the saying went:

Buy the 5 dollar screw, If anything goes wrong you can't be blamed, but for buying a 10 cent screw... You're screwed...

The professionals generally pay more...

[szlamany]

25 sales at $25 ($625 a month) is not enough to support a business - as you are well aware as you are working another business as you said.

But you are by yourself.

You never get support calls from customers? 12000 pc's are running your product and you don't get a ton of e-mails every days?

Marketing is expensive - a customer has to see your name 9 times before they feel comfortable buying from you. We do on-the-floor tradeshows to market our product - talking directly the the decision makers.

If you never plan on enhancing the product then it's a dead product anyway...

But this still boils down to a simple spreadsheet of past sales - broken down by individual counts per month and then further listed by "bulk sales" in some increment. Wouldn't your goal be to keep the "monthly" cash flow of a size that makes you happy and still have a desire to process the sales?

I would think that there is a point where too few sales becomes a "why am I even doing this type of thing".

You've got 12000 past sales - as long as there aren't a couple of flukey big-bulk sales that got you to that 12000 then you have lots of good data to analyze. Of course if 2 or 3 bulk sales got you to 10000 pc's then you really need to consider where to put your eggs.

[gnznroses]

yeah, one sell was 7500 (and $7500). should've charged more on that one too. it was hard to get much out of them but i believe they were installing the software on pcs and then selling the pcs as a security solution. so definitely should've charged more... but i'm young now and was even younger then, so i didn't want to chance it. and i had no other business at that time.
but yeah, they do their own support on those. i never have to hear from them.

i don't do phone support.
it's definitely worth my time to process the sales and to try and increase sales. ~$600-$900 per month is a big help to me. my other business doesn't do much, if any, better.

so yeah, the sales are important to me. but if i raise prices and somehow make a bit less money, it's not a big deal. so i'm free to experiment with it.