Joel Spolsky on Pricing Software
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.
All three methods work fine.
Read the rest on Joel’s blog.