February 22, 2023

This Much

First, let me extend a hearty “Thank you!” to the 150+ fellow list members who replied to my question from yesterday, which was this:

How much should software cost?

As many pointed out, the question is comically vague and doesn’t provide enough information to give a specific dollar amount... but that didn’t stop some people from trying!

Here are a few of my favorite price-based answers, ranging from zero to infinity:

Other folks took a more circumspect approach to their answer:

And one intrepid reader even thought of outsourcing the answer to an AI. Here’s what ChatGPT had to say about how much software should cost:

“Price the software high enough to make a profit but not so high that it’s cheaper for customers to hire a team of developers to build their own version.”

Here’s the thing...

The point of my overly vague question was to inspire folks to come up with an answer based on pricing principles, not on something like comps.

If I were to answer my own question, it’d look like this:

Q: How much should software cost?

A: Less than it’s worth.

This is just my particular flavor of the “a percentage of the value it generates” category of answers.

What I like about this answer is that it highlights two important things:

1. The inherent subjectivity of value - “the software” will be worth different things to different people, so it’s perfectly reasonable to think some people would agree to different prices for it.

2. A suggestion to scope last - The idea of starting with what something is worth to a given buyer and then working backward to define a scope that supports a price that is acceptable to both buyer and seller.

Which is to say... ChatGPT kinda nailed it. (Thanks, PM!)