I briefly bumped into Joel Spolsky and met him in-person for the first time last week. He was at my favorite coffee shop, Sightglass, having coffee with a mutual friend. I bought him his coffee. I did it simply because the posts he has written on his blog over the years are a treasure trove of evergreen content. When searching for answers to my questions about SaaS or scaling software businesses I end up finding a blog post or two of his.
He wrote a post in 2004 that is still very relevant today, it’s about segmentation and how to price your software. Here’s how he breaks down the 3 options for pricing your software:
Software is priced three ways: free, cheap, and dear.
Free. Open source, etc. Not relevant to the current discussion. Nothing to see here. Move along.
Cheap. $10 – $1000, sold to a very large number of people at a low price without a salesforce. Most shrinkwrapped consumer and small business software falls into this category.
Dear. $75,000 – $1,000,000, sold to a handful of rich big companies using a team of slick salespeople that do six months of intense PowerPoint just to get one goddamn sale. The Oracle model.
The next time you have a question for a coworker, try writing it out as if they were 1000 miles and 3 time zones away – even if they’re sitting right next to you. You might surprise yourself with the answer.