One of the things small developers wrestle with is: what price is right?
There are two radically different answers:
- What price can I afford to sell it at?
- What price will my users pay for it?
The first question is a function of the software. To survive, I must recoup the cost of making the software and the cost of supporting the software. Therefore the software should be priced above these costs divided by the number of copies I sell. The problem is I don’t know how many copies I will sell.
The second question is whether people need the software: does it become so entrenched in their way of doing things that without it their computer is broken? At that point, the competition’s price is irrelevant. They’ve found a solution to their problem, is the pain of paying me less that the anticipated pleasure the software will provide.
Although the first question should matter to a user, it usually doesn’t. On the Atari ST I was an early adopter, avid user and evangelist of TurboAssembler. I often thought about sending money for it, even though it was expensive for a 14 year old, but I never got around to it because my copy just worked… There was nothing to fix.
My second answer contradicts Paul Graham’s start-up article, and his recent analysis of kiko’s troubles. I believe a free competitor is only of concern if it gives your users more satisfaction than your own product (part of the satisfaction may be having gotten it for free). But then, you were in trouble anyway…