Pricing yourself right out of the market!

By Neil Ticktin, Editor-in-Chief

Recently, there has been a lot of talk about the cost of upgrades. Most of you in the software industry know that upgrades are the bread and butter of your business. With the long development cycles of new products, many of us rely on upgrades to run our businesses. That’s all well and good, but it’s important to make sure that the pricing of the upgrades has a positive effect on the business.

If you are the type of company that comes out with frequent upgrades, you will want to price them accordingly. In other words, you might want to price the upgrade as more of a “knee-jerk” reaction instead of one that people have to think about.

However, if you are the type of company that comes out with a new version only once in a while, you will want to charge more. The key here is that you can charge more only if your product is worth it.

As you do your pricing, consider the price of ownership of your product. What does technical support cost? What does training cost? What do the upgrades cost? And most importantly, are your customers getting benefits to match the cost?

Don’t make them mad

Remember back to the last round of Microsoft Word and Excel upgrades? Microsoft charged people a whopping $129.00 for the privilege of using the latest and greatest version. Microsoft made a bundle of money on this upgrade, but they also made people angry.

If you’re Microsoft, that’s fine they can afford to do that - they’re the industry standard and therefore people have no choice but to pay. But, if you are a small to medium sized developer, you don’t have that luxury. You actually have to keep your customers happy.

But Neil, what does this all mean?

Update your customers on what is going on - people deal a lot better with known situations. You can communicate information and upgrade status through ads, direct mail, newsletters, online presence or telesales. This may boost your sales and will increase goodwill. It is very important to ensure value for your customers, and therefore, profit for you.

THINK Top 10

You may have noticed the new THINK Top 10 column in the August issue. If you didn’t, this is a Q&A article on the Top 10 technical support questions from THINK Technical Support, Symantec Corp. It is written by Symantec people. This column is now a regular feature of MacTech Magazine. Let us know what you think about it!

Apple certified: the best way to cheap hardware - Not!

For a long time now, many people have thought that they should be an Apple Certified Developer - now called Apple Partners and Associates - so that they can get equipment cheap. Apple’s hardware purchase program is wrought with problems though.

Take one example. In July, we needed a Centris 610 in our office. Supposedly at this time, Apple had inventory stacking up somewhere. The problem was so bad that they introduced rebates through the dealer channel. Yet, if you called Customer Service for developer purchases, they told you that the wait was four weeks, no rebate is offered and you still have to pay with a cashier’s check in advance. Wow, such a deal!

If you do need hardware, it’s probably just better to go to your local dealer and negotiate. One of my favorite stores is Personal Support computers in West Los Angeles - they move more Macintoshes than any other single store in the United States. As a result, they are willing to make a reasonable profit - not take you to the cleaners. The little bit extra that you might pay over Apple’s price is well worth the speed and lack of hassle. Think about it - you might find your local dealer to be the better solution.

Next Month

By the time you read this, Macworld will have just passed. We’ll follow up the show with a Macworld Report from the developer’s point of view in the October issue.