price - The amount that your software costs.
Next to the question, "Will this software run on my computer?", the most important software marketing question that a software developer can answer on her website is, "How much does this software cost?"
Tell prospects how much your software costs
Saying that your application costs $19.95 narrows it down to US dollars, Canadian dollars, Hong Kong dollars, Singapore dollars, Bermuda dollars, Australian dollars, New Zealand dollars, Bahamas dollars, and about 20 or 30 others.
You will sell more programs if you make it easy for prospects to learn the price, so they can concentrate on how their life would be better if they bought your software. If you make it difficult to find the price of your software, prospects won't be reading the sales presentation on your website. Instead, prospects will be scrolling and clicking links that look promising, trying to discover how much you charge for your application.
In his book "Why We Buy - The Science of Shopping," Paco Underhill tells us that shoppers in brick-and-mortar stores dislike obscure price tags. This distaste for hidden and obscure prices carries over to the web. Underhill would no doubt urge software developers to make it simple for website visitors to find their pricing information. It's good software marketing.
Price alone is a bad way to differentiate
Many software developers try to use their application's price to differentiate it from their competitors' programs. According to Jack Trout in his book "Differentiate or Die," price can rarely be a good way to differentiate.
Trout tells us that price can be the enemy of differentiation. When you put price at the center of your software marketing message, people assume that you're not able to say why you're different from - and superior to - your competitors. So, Trout explains, it's best to avoid competing on price.
If you should decide to compete on price, then be sure to have a comprehensive argument on how price and value are merged together to provide something unique. Trout provides a number of examples of merging price and value to market effectively:
Southwest Airlines used this approach when they justified their low ticket prices with a system of hubs in smaller municipalities.
Wal-Mart succeeds with a combination of three factors: Low prices, store locations in smaller towns, and vendor contracts that support their lower prices.
Dell uses affordable prices along with direct sales in their marketing strategy.
Price alone is not a good basis for software developers to use to compete. But price plus something else - something that makes a low price logical - can be an effective way to differentiate your software from your competitors' programs.
Responding to other software developers' prices
If you have a software competitor who is denting your sales by lowering the price of their applications, then there are some software marketing strategies that you can use to compensate. Here are three of Trout's suggestions, translated into the software development industry:
Do something that isn't being done in the software industry. Don't simply lower your price to match your competitor's price. Instead, create a software bundle, or find a non-price way to modify what you're marketing to your customer base.
Confuse everybody in the software marketplace. This type of confusion is what MCI did when they launched their "Friends & Families" discount promotion. MCI made it hard for prospects - and for their competitors - to determine if their pricing would be higher or lower than, say, AT&T's more traditional long-distance telephone pricing.
Change the software marketing discussion. Admit that your software application costs more to purchase initially. In addition, tell your customers that you give away free upgrades for, say, the first two years. Stress the total cost of ownership (TCO). Change the argument from initial price to overall cost over the life of the software.
Lower your software prices with care
Trout tells us that price reduction sales are a bad strategy. He doesn't believe that they bring in additional long-term profits.
Sergio Zyman, author of "The End of Marketing As We Know It," believes that discounting your prices is a sign of marketing laziness. Price-cutting, he would tell software developers, is what marketers do when they run out of creative new marketing strategies. "When a price promotion ends," Zyman tells us, "the consumers move on to the next guy who's willing to pay them to buy his product."
Trout tells a fascinating tale about low prices in the sports retailing business. The four biggest sports retailers are all struggling to show a profit. They have been competing nearly exclusively on price. When Wal-Mart and Kmart got into the sports retailing business, and gained 35 percent of the market for sports equipment, the four big sports retailers were in a world of trouble.
Trout does not like the "free" trend that we see a lot in the software development industry. Trout believes that it's hard to distribute products or services for free, and turn a profit year after year.
Can independent software vendors (ISVs) succeed with a high-price approach to software marketing? Many consumers believe that the highest quality products should cost more. Many people are willing to pay for products that will impress their neighbors, coworkers, and friends. A high price, Trout believes, becomes a benefit of the product itself because it impresses the buyers' family and colleagues. In difficult economic times, however, pricing your programs at the high end of the spectrum may not be the best way to approach software marketing.
Lowering prices is not a good long-term software marketing strategy. Philip Kotler, author of "Kotler On Marketing - How to Create, Win, and Dominate Markets," is not a fan of lowering prices. At the time Kotler wrote this book, he had sold more than 3,000,000 marketing textbooks, and done marketing consulting work for huge companies including AT&T, General Electric, Ford, and IBM.
Kotler reports that the marketing professionals who attend his seminars believe that their customers are more sophisticated than they were in the past. Their customers are also more price-sensitive. At the same time, these attendees believe that dropping prices doesn't work because competitors drop their prices too. And everybody loses.
Kotler urges us not to price our product or service based on a mark-up. Your prospects and customers don't care how many hours it took you to write your application, or how much you paid for the programming tools that you rely upon. Software developers should base their prices by determining the value of the product to their customers.
Branding and pricing are tied together, Kotler tells us. In our industry, software marketing is all about building a brand. If you don't build a brand and differentiate yourself from your competitors, then you're selling a commodity application. The only way to differentiate yourself in a commoditized software marketplace is by price. And that's not a good software marketing strategy.
Pricing and software marketing strategy
Selecting the optimal price for your application should be part of your software marketing strategy. Don't use a simplistic definition of price. Instead, consider the list price, site license discounts, allowances, coupons, credit terms, affiliate fees, commissions, and any bundled products or services that you may be offering.
microISVs often ask if it is a good software marketing strategy to offer a low-priced personal license and a higher-priced business license, for identical software. Some prospects will be offended by this approach.
Actually, consumers are accustomed to seeing this kind of pricing. For example, if you go to a music concert, you would expect to pay more for seats that are closer to the stage, even though the seats themselves cost no more to manufacture or install than those seats that are farther away from the stage. Most consumers expect to pay more for weekend tickets than for weekday tickets. The concept of individual-versus-business pricing isn't bizarre. But you have to "sell" the idea to your software prospects.
Kotler urges us to find a way to add value to the more expensive version of our product or service. For example, you could offer priority support, or coupons, or long-term discounts to the people who buy the business license versus the individual license. The ideal software marketing strategy seems to be to create a series of attractive offerings at a range of price points.
Pricing and repeat customers
Developing long-term customers, Kotler argues, can deliver advantages to people who are marketing products such as software. Software developers can cross-sell and upsell to their long-term clients. It takes less effort to complete transactions with them because they're familiar with your software, communications, emails, and procedures - and because they trust you. They're more likely to recommend your programs to their friends and business associates.
There is also a pricing consideration to developing long-term customers. Your long-term customers are less price-sensitive because they've developed a relationship with your company. They'll pay a little more for your software applications because they're comfortable buying from your company.
Kotler views pricing as a method for dealing with difficult customers. Many firms lose money on some percentage of their worst clients. If you're getting a lot of customers who require too much technical support, for example, find out why they're buying their software from you, and do something to change that.
If you want to keep these customers, then educate them. Turn them into more profitable customers so you're not spending as much time supporting them. Alternatively, raise your prices so it's worthwhile to deal with these problem customers.
Raise your software prices
David Ogilvy has some thoughts on maintaining high prices in a price-sensitive marketplace. In his book "Ogilvy on Advertising," Ogilvy told his prospects, "If you are going to choose your agency on the basis of price, you are looking through the wrong end of the telescope."
Ogilvy urges his prospects and customers to put more emphasis on the increased sales that he can deliver for them, and less emphasis on the fees that he charges. I believe that Ogilvy's approach can help you sell more software online, too, by emphasizing the value and benefits of your software..
Don't price your software applications too low. Ogilvy points out that many consumers judge the value of a product by its price. I agree with Ogilvy. Too many software developers price their applications too low, and this hurts their profits.
Harry Beckwith, the author of "The Invisible Touch - The Four Keys to Modern Marketing," also believes that low prices are not the road to business success. Beckwith tells us that higher-priced goods and services are perceived to be better than their lower-priced competitors. Price changes buyers' perceptions. A high price can actually enhance the experience of using a product or service.
"Higher prices don't just talk," Beckwith tells us. "They tempt."
My 28+ years of marketing experience in the software industry confirm Beckwith's notion. Most ISVs have found that their Pro version outsells their Standard version.
Beckwith believes that price is often the excuse (but rarely the reason) that you're losing market share to competitors. "Look deeper," he suggests.
Most prospects can afford to pay more money for your software application. For most developers, it doesn't make sense to charge them less. Instead, do a better job of convincing software prospects that your applications have more value than the software that your competitors offer.
Pricing your application
In the software marketing world, there is no shortage of advice on how to price your application. But there is no simple formula for discovering the ideal price-point for your programs.
You have to think about all of the factors discussed above. Take your best guess at the right price for your software, and measure the results. Then, change the price that you're charging, and measure again. My best advice would be - raise your prices a little. They're probably a tad too low. Finding the ideal price should be at the heart of your software marketing strategy.
price promotion - An admission that your software is a look-alike commodity that cannot compete on features or benefits.
When you think about reducing the price of your application, listen to that feeling in your stomach, and find a better way to differentiate your program in the marketplace. Add functionality. Market your software in new and innovative ways.
Don't throw in the towel. Don't reduce your prices unless you've truly priced your program too high.
printer friendly - A description of web pages that can be printed without causing users a lot of pain.
Often, business people will ask their secretaries or administrative assistants to visit the web and print pages that are on-target for a particular software-buying need. If your web page looks like it will use most of an ink jet cartridge, and take 20 minutes to dry after the page is printed, your web pages aren't going to be printed as frequently as they would be if they were black-on-white text-only pages.
If you want users to print information from your website, give them text-only pages with few banners, and no light-on-dark blocks.
Alternatively, give them separate printer-friendly pages that they can print. Use the appropriate HTML or CSS code so the search engines only index one of these two pages. Don't let them penalize you for having duplicate content on your site.
product - Something that sells.
According to Ted Levitt (quoted in Kotler on Marketing by Philip Kotler), a product is not a product unless it sells. Otherwise it is merely a museum piece.
That's why software marketing should be high on every developer's to-do list.
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