For of their product. Nowadays, most producers

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    For the initial step of pricing the software product, there are the first three things to understand. Firstly, software owner should have a deep understanding of the business goal. Before setting a price, the owner need to clearly define the goal because understanding long-term business goal is critical to choosing the right pricing strategy to grow the business. Also, different pricing strategies exist for each goal.1 Secondly, software owner should understand the development plan of their product. Nowadays, most producers usually was developed the better version of software to keep supporting user work, so software owner have to think about how long of selling that software product before the new version release. In addition, the development plan of software may change every time. So the software owner should concern about this, and choose the pricing strategy carefully. Lastly, software owner should think about the target customer. Because different markets have different appetites for different pricing and different buying habits, so solid market research can help the software owner better understand the demographics of the target customers and create market segments that allow to price the products appropriately.2 Moreover, thoroughly understanding of target market’s decision-making and buying process will help software owner plans for Improving sales performance.          The next step of pricing the software product is choosing a pricing strategy that suit with the business and the software product because each strategy has a different effect, and these following are three interesting SaaS (software as a service) pricing strategies. The first one is the Freemium strategy. This strategy is providing awesome functionality for free, then have a range of upgrades. The strength point of this strategy is fast increasing of new customer because if customer A satisfies with the software, they will suggest their acquaintance to the user. However, this model can make a huge growing, but it’s not working for every product. According to the article in wall street journal, it talks about the failure of this strategy, also David Cohen’ s speaking that there are only one or two percent of users that will upgrade to use the premium version. So, if there is a little different between a free version and premium version, in the end will be a losing business.3 The second one is per user pricing. Per-user pricing is a common SaaS pricing model, where the user pay different amounts depending on the numbers of people using the service. This strategy does not suit with the customer in the form of companies that have multiple users because it will cut down on the number of people within a company who can get to know and use the software, and the model also limits the potential number of active users.3 The last one is flat rate pricing or subscription. This is probably the easiest pricing model. Vendors will offer a product with some features at a defined price. Usually it is billed monthly or annually, with a discount on annual subscriptions. The strength point of this strategy is a regular income that can estimate, and if there is no something wrong, the value paid by each user will be very high. However, if there is no a new feature to keep supporting the customer, they may cancel the subscription anytime. And this strategy is now so unpopular even if it is really simple and clear.3          For the final step of pricing the software product is making a final analysis that has three things to concern. The first one is the cost of making the product. To build some program, there are many cost such as time of development, maintaining, fixing bugs and doing minor enhancements, and cost of customers support for after sales service. 4 Also, understand how much profit the company needs to generate it will be far more effective when considering discount promotions and know exactly how low it can go and still be profitable. So do not forget to set the price higher than the costs and include profits in calculations. The second one is the price of the competitor’s product. Understanding how both direct and indirect competitors price their products is a great starting point for pricing the own product. The second one is the price of the competitor’s product. Understanding how both direct and indirect competitors price their products in order to apply for pricing the own one. And also, the feedback from their customer why they purchase that product will help analyzing the reasonable price too. The last one is determining price sensitive. Software owner should understand the effect of consumer choice because the price has to take into consideration what the customers feel is reasonable. For example, if The company A charge with the little price, customers may associate the price with the value of company A’s a product and consider it “cheap”. Also, software owner should consider feedback from user after release the product is negative or not for improving and changing to the suitable price. 5

Categories: Strategy


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