Business for babies
Thanks to my friend Eric Anderson for pointing me towards an ongoing argument on 37signals about software pricing. I think Mike Arrington nails it here:
If you are in a position to charge for your software and you aren’t that concerned with dominating your category, by all means go for it. But to blindly follow the idea that software must not be free because, damnit, people put a lot of time and effort into it, means you probably shouldn’t be making the business decisions for your company. And if you are entering what is already a commoditized business…that has a price point of zero, you are absolutely crazy to try to charge for that product.
Offering your product for free isn’t always the right choice, either. Often, the right choice is to never have entered the market to begin with. But just because 37Signals tell you you are dumb to go the free route doesn’t mean you have to be a lemming and walk over the cliff.
Or, as I said to Eric via email, a sense of entitlement to revenue is one of the least useful traits any entrepreneur can have. (I see this as a huge problem with lots of indie bookstores who think they deserve to have the business that, for example, B&N or Borders are taking off them, just by virtue of existing. Innovate or die, as they say. There are plenty of indies who have figured this out, and are working at survival rather than bitching, and I’m a lot more inclined to give them my money than I am B&N or Borders.)
This idea - often expressed as “Anyone who’s willing to do a day’s work deserves to make a ‘fair wage’” - is not only ridiculous and harmfully selfish, but bad for individuals and for what we can call “the common good”.
The only people I know who rightfully complain if reality is not commensurate with their sense of entitlement and expectations are all wearing diapers. It’s not exactly a good look for the boardroom, or for any other aspect of adult life.
Filed under: Life
What bugs me are people who use free software and then are upset when it doesn’t work, doesn’t work as advertised, or isn’t exactly what they want. Its free, what do you want.
I’ve always felt you get what you pay for. Why are people willing to pay more for an Apple that doesn’t work as good as Windows? OK maybe its marketing but the over all design is worth the premium to some people.
Hi Jackie,
I earn a comfortable salary writing software for a small, 30+ year old software company.
a sense of entitlement to revenue is one of the least useful traits any entrepreneur can have
Agreed. We decide what our software costs. Our (potential) customers decide what it is worth. We forget this distinction at our peril.
And if you are entering what is already a commoditized business…that has a price point of zero, you are absolutely crazy to try to charge for that product.
Absolutely. There are things we used to charge a lot of money for that the end users can now get free. The trick for us was finding someone who was willing to pay us to develop this stuff and give it away, because they derive other benefits from it being available.
We have other things that are not commoditized that we can sell, to some customers, for very large amounts of money. To be honest, they are not paying so much for the software, but rather for the support we provide to them using it. In other words, they are not paying us because we have put a lot of time and effort into it, but so that we will continue to do so.