Desktop Software Startup: How to go about pricing Pay Per Feature


4

So I found lot of articles and questions on pricing software in separate market segments but for my current desktop software here's my model.

I offer a free version with lot of disabled features. The user can only process up to 1000 document files. I also let users evaluate specific features for 30 days before they purchase it.

Some features include things like the number of simultaneous jobs they can run in the software. Currently the free version is limited to one. Even if they upgrade to the $99 basic version without any purchased features, they will be able to run only one job at a time. However, the 1000 document files limitation is eliminated.

Overall, the users can choose the features they want added, and only pay for those features.

However, my pricing currently goes something like this

$99: basic setup fee per license. This is the minimum a user will spend.
$200 for each features ( I currently have about 6).

So in the end: ($99 + $200 X Features) X Number of Licenses. Price range: $99 ~ $1299.

Should individual features have different prices? How would I place relatively increased price valuation on a feature? Currently, I just set them all equal in valuation.

Do you think I should get rid of the setup fee per license? The user could choose not to get any features added and just purchase the $99 license. This will remove the 1000 document file limit to unlimited. However, it still lacks all of the other features because they did not purchase them....

My rationale for implementing pay-per-feature model is because I found that more often, people had very different needs, and I felt that they shouldn't need to pay for features they won't use.

I guess someone might also think that they will get extra features regardless of whether they actually use it or not, at the traditional bundled pricing. The pay-per-feature model might actually cause the perceived cost to be much higher (as the future need to continually upgrade exists).

I would like to get some discussion going, but more importantly, if I was to pursue pay-per-feature, what resources out there or advices do you have?

If I am totally wrong about pay-per-feature (too exotic) and should stick to traditional pricing methods, I am open to hear opinions and suggestions for that as well.

Pricing Features

asked Dec 21 '11 at 21:42
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Gagwgw
227 points

2 Answers


2

The feature pricing is OK, although I think 6 may be too many. However, 3 different versions Basic, Pro and Expert (or whatever) seems to be more popular.

Are you handling this with different products or activating the features through a licensing program? You have to give the user a chance to upgrade later. This means not only a license or program download, but also another 30 day trial of the feature, so they can see if they want to use it.

answered Dec 22 '11 at 07:52
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Patrick Ny
300 points
  • yes, there is an automated licensing backend. its very easy to upgrade. – Gagwgw 7 years ago

1

Personally, I would not touch a software product priced per-feature with a totem pole. If you sell to individuals or small companies, your average customer would find such pricing impossible to comprehend and TCO impossible to project. Make three editions and concentrate on marketing.

If you really want to optimize your price for each sale, you can try the fill-a-form-with-10-text-fields-and-two-dozen-checkboxes-and-we'll-tell-you-the-price-maybe-next-week approach, but then you risk diverting prospects away from your Web site.

That said, I can imagine that it may work for volume sales, but the other way round. That is, to a 1,000 seat price request you can respond with something like "The price of the full version would be $1,200*1,000*50% volume discount = $600K, but if you absolutely do not need feature X, Y, and/or Z, I can disable them and you would save $Xsave, $Ysave, and/or $Zsave."

Finally, it also depends on the target market - CRM software is often priced per-module. If your (potential) customers are used to complicated pricing schemes, you may possibly get away with yours. OTOH having a simpler scheme can be a competitive advantage.

answered Dec 21 '11 at 23:33
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Dmitry Leskov
606 points
  • not sure what you mean with totem pole expression? – Gagwgw 7 years ago
  • **wouldn't touch someone or something with a ten-foot pole** *Cliche* not to have anything to do with someone or something. – Dmitry Leskov 7 years ago

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